1 North Waukegan Road

North Chicago, Illinois ~~60064~~60064-6400

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”~~company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filerx

Non-Accelerated Filer¨

Smaller reporting company¨

Emerging growth company¨

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ABBV

New York Stock Exchange

Chicago Stock Exchange

1.500% Senior Notes due 2023

ABBV23B

New York Stock Exchange

1.375% Senior Notes due 2024

ABBV24

New York Stock Exchange

1.250% Senior Notes due 2024

ABBV24B

New York Stock Exchange

0.750% Senior Notes due 2027

ABBV27

New York Stock Exchange

2.125% Senior Notes due 2028

ABBV28

New York Stock Exchange

2.625% Senior Notes due 2028

ABBV28B

New York Stock Exchange

2.125% Senior Notes due 2029

ABBV29

New York Stock Exchange

1.250% Senior Notes due 2031

ABBV31

New York Stock Exchange

As of ~~October 24, 2017,~~July 31, 2023, AbbVie Inc. had ~~1,596,429,740~~1,765,046,680 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries



~~2017 Form 10-Q~~ \|	1

PART I. FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)


	Three months ended June 30,				Six months ended June 30,
(in millions, except per share data)	2023		2022		2023		2022
Net revenues	$	13,865	$	14,583	$	26,090	$	28,121

Cost of products sold	4,240		4,170		8,226		8,222
Selling, general and administrative	3,268		5,412		6,307		8,539
Research and development	1,733		1,609		4,025		3,106
Acquired IPR&D and milestones	280		269		430		414
Other operating income	(169)		(172)		(179)		(172)
Total operating costs and expenses	9,352		11,288		18,809		20,109
Operating earnings	4,513		3,295		7,281		8,012

Interest expense, net	454		532		908		1,071
Net foreign exchange loss	37		47		72		72
Other expense, net	1,412		1,533		3,216		757
Earnings before income tax expense	2,610		1,183		3,085		6,112
Income tax expense	583		255		817		691
Net earnings	2,027		928		2,268		5,421
Net earnings attributable to noncontrolling interest	3		4		5		7
Net earnings attributable to AbbVie Inc.	$	2,024	$	924	$	2,263	$	5,414

Per share data
Basic earnings per share attributable to AbbVie Inc.	$	1.14	$	0.52	$	1.27	$	3.04
Diluted earnings per share attributable to AbbVie Inc.	$	1.14	$	0.51	$	1.26	$	3.03

Weighted-average basic shares outstanding	1,767		1,770		1,768		1,770
Weighted-average diluted shares outstanding	1,771		1,776		1,773		1,777

Three months ended
September 30, Nine months ended
September 30,
(in millions, except per share data) 2017 2016 2017 2016
Net revenues $ 6,995
$ 6,432
$ 20,477
$ 18,842

Cost of products sold 1,616
1,504
4,760
4,278
Selling, general and administrative 1,452
1,381
4,324
4,202
Research and development 1,222
1,106
3,580
3,176
Acquired in-process research and development —
80
15
160
Total operating costs and expenses 4,290
4,071
12,679
11,816
Operating earnings 2,705
2,361
7,798
7,026

Interest expense, net 252
250
752
675
Net foreign exchange loss (gain) 9
(4 ) 28
313
Other expense, net 349
101
484
152
Earnings before income tax expense 2,095
2,014
6,534
5,886
Income tax expense 464
416
1,277
1,324
Net earnings $ 1,631
$ 1,598
$ 5,257
$ 4,562

Per share data
Basic earnings per share $ 1.02
$ 0.97
$ 3.28
$ 2.79
Diluted earnings per share $ 1.01
$ 0.97
$ 3.27
$ 2.78
Cash dividends declared per common share $ 0.64
$ 0.57
$ 1.92
$ 1.71

Weighted-average basic shares outstanding 1,597
1,632
1,596
1,624
Weighted-average diluted shares outstanding 1,603
1,640
1,602
1,633

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



~~2017~~2023 Form 10-Q \|			21

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (unaudited)


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net earnings	$	2,027	$	928	$	2,268	$	5,421

Foreign currency translation adjustments, net of tax expense (benefit) of $(6) for the three months and $6 for the six months ended June 30, 2023 and $(12) for the three months and $(19) for the six months ended June 30, 2022	(16)		(823)		178		(1,054)
Net investment hedging activities, net of tax expense (benefit) of $2 for the three months and $(58) for the six months ended June 30, 2023 and $146 for the three months and $183 for the six months ended June 30, 2022	11		536		(213)		666
Pension and post-employment benefits, net of tax expense (benefit) of $(4) for the three months and $10 for the six months ended June 30, 2023 and $11 for the three months and $21 for the six months ended June 30, 2022	(2)		48		36		76
Cash flow hedging activities, net of tax expense (benefit) of $(4) for the three months and $(8) for the six months ended June 30, 2023 and $5 for the three months and $3 for the six months ended June 30, 2022	(13)		27		(54)		15
Other comprehensive loss	(20)		(212)		(53)		(297)
Comprehensive income	2,007		716		2,215		5,124
Comprehensive income attributable to noncontrolling interest	3		4		5		7
Comprehensive income attributable to AbbVie Inc.	$	2,004	$	712	$	2,210	$	5,117

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Net earnings $ 1,631
$ 1,598
$ 5,257
$ 4,562

Foreign currency translation adjustments, net of tax expense (benefit) of $7 for the three months and $40 for the nine months ended September 30, 2017 and $10 for the three months and $30 for the nine months ended September 30, 2016 183
31
602
164
Net investment hedging activities, net of tax expense (benefit) of $(52) for the three months and $(174) for the nine months ended September 30, 2017 and $— for the three months and $— for the nine months ended September 30, 2016 (90 ) —
(307 ) —
Pension and post-employment benefits, net of tax expense (benefit) of $8 for the three months and $23 for the nine months ended September 30, 2017 and $8 for the three months and $23 for the nine months ended September 30, 2016 8
15
21
48
Marketable security activities, net of tax expense (benefit) of $4 for the three months and $6 for the nine months ended September 30, 2017 and $1 for the three months and $(7) for the nine months ended September 30, 2016 (28 ) 12
(18 ) 19
Cash flow hedging activities, net of tax expense (benefit) of $(14) for the three months and $(29) for the nine months ended ended September 30, 2017 and $1 for the three months and $(3) for the nine months ended September 30, 2016 (138 ) (8 ) (325 ) (10 )
Other comprehensive income (loss) (65 ) 50
(27 ) 221
Comprehensive income $ 1,566
$ 1,648
$ 5,230
$ 4,783

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



~~2017~~2023 Form 10-Q \|			32

AbbVie Inc. and Subsidiaries

Condensed Consolidated Balance Sheets


(in millions, except share data)	September 30, 2017			December 31, 2016			(in millions, except share data)	June 30, 2023		December 31, 2022
	(unaudited)							(unaudited)
Assets							Assets
Current assets							Current assets
Cash and equivalents	$	8,446		$	5,100		Cash and equivalents	$	8,759	$	9,201
Short-term investments	1,108			1,323			Short-term investments	7		28
Accounts receivable, net	4,891			4,758			Accounts receivable, net	11,491		11,254
Inventories	1,785			1,444			Inventories	4,055		3,579
Prepaid expenses and other	2,700			3,562			Prepaid expenses and other	4,540		4,401
Total current assets	18,930			16,187			Total current assets	28,852		28,463

Investments	1,971			1,783			Investments	288		241
Property and equipment, net	2,697			2,604			Property and equipment, net	4,943		4,935
Intangible assets, net	28,167			28,897			Intangible assets, net	62,862		67,439
Goodwill	15,748			15,416			Goodwill	32,224		32,156
Other assets	1,327			1,212			Other assets	6,198		5,571
Total assets	$	68,840		$	66,099		Total assets	$	135,367	$	138,805

Liabilities and Equity							Liabilities and Equity
Current liabilities							Current liabilities
Short-term borrowings	$	800		$	377		Short-term borrowings	$	—	$	1
Current portion of long-term debt and lease obligations	3,021			25
Current portion of long-term debt and finance lease obligations							Current portion of long-term debt and finance lease obligations	5,203		4,135
Accounts payable and accrued liabilities	9,212			9,379			Accounts payable and accrued liabilities	27,036		25,402
Total current liabilities	13,033			9,781			Total current liabilities	32,239		29,538

Long-term debt and lease obligations	33,974			36,440
Long-term debt and finance lease obligations							Long-term debt and finance lease obligations	55,812		59,135
Deferred income taxes	6,147			6,890			Deferred income taxes	2,124		2,190
Other long-term liabilities	8,999			8,352			Other long-term liabilities	32,294		30,655

Commitments and contingencies							Commitments and contingencies

Stockholders’ equity
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,767,419,360 shares issued as of September 30, 2017 and 1,754,900,486 as of December 31, 2016	18			18
Common stock held in treasury, at cost, 171,296,169 shares as of September 30, 2017 and 162,387,762 as of December 31, 2016	(11,419		)	(10,852		)
Stockholders' equity							Stockholders' equity
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,821,926,709 shares issued as of June 30, 2023 and 1,813,770,294 as of December 31, 2022							Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,821,926,709 shares issued as of June 30, 2023 and 1,813,770,294 as of December 31, 2022	18		18
Common stock held in treasury, at cost, 57,127,750 shares as of June 30, 2023 and 44,589,000 as of December 31, 2022							Common stock held in treasury, at cost, 57,127,750 shares as of June 30, 2023 and 44,589,000 as of December 31, 2022	(6,528)		(4,594)
Additional paid-in capital	14,154			13,678			Additional paid-in capital	19,839		19,245
Retained earnings	6,547			4,378			Retained earnings	1,789		4,784
Accumulated other comprehensive loss	(2,613		)	(2,586		)	Accumulated other comprehensive loss	(2,252)		(2,199)
Total stockholders’ equity	6,687			4,636
Total stockholders' equity							Total stockholders' equity	12,866		17,254
Noncontrolling interest							Noncontrolling interest	32		33
Total equity							Total equity	12,898		17,287

Total liabilities and equity	$	68,840		$	66,099		Total liabilities and equity	$	135,367	$	138,805

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



~~2017~~2023 Form 10-Q \|			43

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of ~~Cash Flows~~Equity (unaudited)

Nine months ended
September 30,
(in millions) (brackets denote cash outflows) 2017 2016
Cash flows from operating activities
Net earnings $ 5,257
$ 4,562
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 324
307
Amortization of intangible assets 808
554
Change in fair value of contingent consideration liabilities 547
143
Stock-based compensation 288
278
Upfront costs and milestones related to collaborations 85
230
Devaluation loss related to Venezuela —
298
Other, net (73 ) 326
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (163 ) (129 )
Inventories (119 ) 28
Prepaid expenses and other assets (22 ) (122 )
Accounts payable and other liabilities 444
(975 )
Cash flows from operating activities 7,376
5,500

Cash flows from investing activities
Acquisitions of businesses, net of cash acquired —
(2,477 )
Other acquisitions and investments (180 ) (172 )
Acquisitions of property and equipment (347 ) (365 )
Purchases of investment securities (1,838 ) (4,520 )
Sales and maturities of investment securities 1,890
1,579
Cash flows from investing activities (475 ) (5,955 )

Cash flows from financing activities
Net change in short-term borrowings 423
(406 )
Proceeds from issuance of long-term debt —
7,771
Repayments of long-term debt and lease obligations (18 ) (2,006 )
Debt issuance costs —
(52 )
Dividends paid (3,077 ) (2,784 )
Purchases of treasury stock (905 ) (4,223 )
Proceeds from the exercise of stock options 214
210
Payments of contingent consideration liabilities (268 ) —
Other, net 47
64
Cash flows from financing activities (3,584 ) (1,426 )
Effect of exchange rate changes on cash and equivalents 29
(300 )
Net change in cash and equivalents 3,346
(2,181 )
Cash and equivalents, beginning of period 5,100
8,399

Cash and equivalents, end of period $ 8,446
$ 6,218

Supplemental schedule of non-cash investing and financing activities
Issuance of common shares associated with acquisitions of businesses $ —
$ 3,923


(in millions)	Common shares outstanding	Common stock		Treasury stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Noncontrolling interest		Total
Balance at March 31, 2022	1,767	$	18	$	(4,585)	$	18,731	$	5,103	$	(2,984)	$	31	$	16,314
Net earnings attributable to AbbVie Inc.	—	—		—		—		924		—		—		924
Other comprehensive loss, net of tax	—	—		—		—		—		(212)		—		(212)
Dividends declared	—	—		—		—		(2,511)		—		—		(2,511)
Purchases of treasury stock	—	—		(9)		—		—		—		—		(9)
Stock-based compensation plans and other	1	—		3		175		—		—		—		178
Change in noncontrolling interest	—	—		—		—		—		—		4		4
Balance at June 30, 2022	1,768	$	18	$	(4,591)	$	18,906	$	3,516	$	(3,196)	$	35	$	14,688

Balance at March 31, 2023	1,764	$	18	$	(6,524)	$	19,619	$	2,393	$	(2,232)	$	29	$	13,303
Net earnings attributable to AbbVie Inc.	—	—		—		—		2,024		—		—		2,024
Other comprehensive loss, net of tax	—	—		—		—		—		(20)		—		(20)
Dividends declared	—	—		—		—		(2,628)		—		—		(2,628)
Purchases of treasury stock	—	—		(10)		—		—		—		—		(10)
Stock-based compensation plans and other	1	—		6		220		—		—		—		226
Change in noncontrolling interest	—	—		—		—		—		—		3		3
Balance at June 30, 2023	1,765	$	18	$	(6,528)	$	19,839	$	1,789	$	(2,252)	$	32	$	12,898

Balance at December 31, 2021	1,768	$	18	$	(3,143)	$	18,305	$	3,127	$	(2,899)	$	28	$	15,436
Net earnings attributable to AbbVie Inc.	—	—		—		—		5,414		—		—		5,414
Other comprehensive loss, net of tax	—	—		—		—		—		(297)		—		(297)
Dividends declared	—	—		—		—		(5,025)		—		—		(5,025)
Purchases of treasury stock	(10)	—		(1,479)		—		—		—		—		(1,479)
Stock-based compensation plans and other	10	—		31		601		—		—		—		632
Change in noncontrolling interest	—	—		—		—		—		—		7		7
Balance at June 30, 2022	1,768	$	18	$	(4,591)	$	18,906	$	3,516	$	(3,196)	$	35	$	14,688

Balance at December 31, 2022	1,769	$	18	$	(4,594)	$	19,245	$	4,784	$	(2,199)	$	33	$	17,287
Net earnings attributable to AbbVie Inc.	—	—		—		—		2,263		—		—		2,263
Other comprehensive loss, net of tax	—	—		—		—		—		(53)		—		(53)
Dividends declared	—	—		—		—		(5,258)		—		—		(5,258)
Purchases of treasury stock	(12)	—		(1,965)		—		—		—		—		(1,965)
Stock-based compensation plans and other	8	—		31		594		—		—		—		625
Change in noncontrolling interest	—	—		—		—		—		—		(1)		(1)
Balance at June 30, 2023	1,765	$	18	$	(6,528)	$	19,839	$	1,789	$	(2,252)	$	32	$	12,898

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



~~2017~~2023 Form 10-Q \|			4

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)


	Six months ended June 30,
(in millions) (brackets denote cash outflows)	2023		2022
Cash flows from operating activities
Net earnings	$	2,268	$	5,421
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	369		401
Amortization of intangible assets	4,018		3,704
Deferred income taxes	(635)		(794)
Change in fair value of contingent consideration liabilities	3,424		861
Stock-based compensation	492		413
Acquired IPR&D and milestones	430		414
Gain on divestitures	—		(172)
Non-cash litigation reserve adjustments, net of cash payments	(118)		2,190
Impairment of intangible assets	710		—
Other, net	(173)		(86)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(275)		(1,396)
Inventories	(458)		(499)
Prepaid expenses and other assets	285		14
Accounts payable and other liabilities	1,107		(448)
Income tax assets and liabilities, net	(932)		(110)
Cash flows from operating activities	10,512		9,913

Cash flows from investing activities
Acquisitions and investments	(513)		(394)
Acquisitions of property and equipment	(353)		(305)
Purchases of investment securities	(35)		(1,411)
Sales and maturities of investment securities	36		50
Other, net	25		599
Cash flows from investing activities	(840)		(1,461)

Cash flows from financing activities
Proceeds from issuance of long-term debt	—		2,000
Repayments of long-term debt and finance lease obligations	(2,353)		(4,881)
Dividends paid	(5,286)		(5,033)
Purchases of treasury stock	(1,965)		(1,479)
Proceeds from the exercise of stock options	113		198
Payments of contingent consideration liabilities	(641)		(482)
Other, net	20		26
Cash flows from financing activities	(10,112)		(9,651)
Effect of exchange rate changes on cash and equivalents	(2)		(26)
Net change in cash and equivalents	(442)		(1,225)
Cash and equivalents, beginning of period	9,201		9,746

Cash and equivalents, end of period	$	8,759	$	8,521

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

AbbVie Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Basis of Presentation

Basis of Historical Presentation

The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2022.

It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the company’s financial position and operating results. Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results. Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.

~~Recent Accounting Pronouncements~~

~~Recently Adopted Accounting Pronouncements~~Note 2 Supplemental Financial Information

Interest Expense, Net


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense	$	552	$	556	$	1,105	$	1,104
Interest income	(98)		(24)		(197)		(33)
Interest expense, net	$	454	$	532	$	908	$	1,071

Inventories


(in millions)	June 30, 2023		December 31, 2022
Finished goods	$	1,177	$	1,162
Work-in-process	1,606		1,417
Raw materials	1,272		1,000
Inventories	$	4,055	$	3,579

~~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.Property and Equipment, Net


(in millions)	June 30, 2023		December 31, 2022
Property and equipment, gross	$	11,318	$	10,986
Accumulated depreciation	(6,375)		(6,051)
Property and equipment, net	$	4,943	$	4,935

~~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 taxDepreciation expense ~~of $14~~was $190 million for the three months and ~~$53~~$369 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 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 Customers (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 made substantial progress in its review of the new standard and will complete its assessment by 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 company expects that the adoption of the new standard will require a cumulative-effect adjustment to retained earnings on January 1, 2018 of approximately $130 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 Liabilities~~. 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 consolidation 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



~~2017 Form 10-Q~~ \|	6

in debt securities. 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 first quarter of 2018. The standard does not permit early adoption with the exception of certain targeted provisions. AbbVie is unable to estimate the impact of adopting this standard on its financial statements as it will be dependent upon the composition of its equity investment portfolio as of the adoption date and future changes in fair value subsequent to the adoption date. However, 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, 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.

~~In June 2016, the FASB issued ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326)~~. The standard changes how credit losses are measured for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans and other financial instruments, the standard requires the use of a new forward-looking "expected credit loss" model that generally will result in the earlier recognition of allowances for losses. For available-for-sale debt securities with unrealized losses, the standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. Additionally, the standard requires new disclosures and will be effective for AbbVie starting with the first quarter of 2020. Early adoption beginning 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. 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. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements. As of ~~September 30, 2017~~, AbbVie had approximately $1.8 billion of prepaid income tax assets that will be affected by this standard, of which $1.3 billion was included in prepaid expenses and other on the condensed consolidated balance sheet.

~~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 preliminarily expects to reclassify income of approximately $50 million from operating earnings to non-operating income for the year ending December 31, 2017.

~~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. The standard will be effective for AbbVie starting with the first quarter of 2019, with early adoption permitted. AbbVie is currently assessing the impact and timing of adopting this guidance on its consolidated financial statements.



~~2017 Form 10-Q~~ \|	7

~~Note 2 Supplemental Financial Information~~

~~Interest Expense, Net~~

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
Interest expense $ 293
$ 271
$ 851
$ 731
Interest income (41 ) (21 ) (99 ) (56 )
Interest expense, net $ 252
$ 250
$ 752
$ 675

~~Inventories~~

(in millions) September 30, 2017 December 31, 2016
Finished goods $ 353
$ 223
Work-in-process 1,271
1,080
Raw materials 161
141
Inventories $ 1,785
$ 1,444

~~Property and Equipment~~

(in millions) September 30, 2017 December 31, 2016
Property and equipment, gross $ 7,894
$ 7,526
Accumulated depreciation (5,197 ) (4,922 )
Property and equipment, net $ 2,697
$ 2,604

~~Depreciation expense was $111~~$203 million for the three months and ~~$324~~$401 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and $96 million for the three months and $307 million for the nine months ended September 30, 2016.~~

2022.



~~2017~~2023 Form 10-Q \|			86

Note 3 Earnings Per Share

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 ~~were~~was insignificant for all periods presented.

Note 4Licensing, Acquisitions and Other Arrangements

Other Licensing & Acquisitions Activity

~~Acquisition of Stemcentrx~~

~~The acquisition of Stemcentrx was accounted for as a business combination using the acquisition method of accounting. The aggregate upfront consideration~~investments totaled $513 million for the ~~acquisition of Stemcentrx consisted of approximately 62.4~~six months ended June 30, 2023 and $394 million ~~shares of~~for the six months ended June 30, 2022. 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 payable for development and regulatory milestones was $4.0 billion. The acquisition-date fair value 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 8.



~~2017 Form 10-Q~~ \|	9

~~The following table summarizes total consideration:~~

~~The following table summarizes fair values of assets acquired and liabilities assumed as of the June 1, 2016 acquisition date:~~

~~Pro Forma Financial Information~~

~~The following table presents the unaudited pro forma combined results of operations of AbbVie and Stemcentrx~~$280 million for the three months and ~~nine~~$430 million for the six months ended ~~September~~June 30, ~~2016 as if~~2023 and $269 million for the ~~acquisition~~three months and $414 million for the six months ended June 30, 2022.

Syndesi Therapeutics SA

In February 2022, AbbVie acquired Syndesi Therapeutics SA and its portfolio of ~~Stemcentrx had occurred on January 1, 2015:~~

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 occurrencenovel modulators of the ~~acquisition on January 1, 2015 as~~



~~2017 Form 10-Q~~ \|	10

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, integration and financing-related costs incurred during 2016 to the three and nine months ended September 30, 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 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~~synaptic vesicle protein 2A, including its lead molecule ABBV-552, previously named SDI-118, and accounted for the transaction as an asset acquisition. ABBV-552 is a ~~business combination using the acquisition method of accounting.~~small molecule, which is being evaluated to target nerve terminals to enhance synaptic efficiency. Under the terms of the agreement, AbbVie made an upfront payment of ~~$595 million. Additionally, $18~~$130 million which was recorded to acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the first quarter of 2022. The agreement also includes additional future payments of up 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~~$870 million upon the achievement of ~~defined~~certain development, regulatory and commercial ~~milestones,~~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 ~~well as royalty payments based on net revenues~~the sale of ~~licensed products. As~~an asset. Upon completion 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.transaction,

~~The following table summarizes total consideration:~~

~~The following table summarizes fair values of assets acquired as of the April 1, 2016 acquisition date:~~

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.



~~2017~~2023 Form 10-Q \|			117

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 condensed consolidated statement of earnings in the second quarter of 2022.

Other ~~Licensing & Acquisitions Activity~~Arrangements

~~Excluding the acquisitions above, cash outflows~~AbbVie entered into several other arrangements resulting in charges related to other acquisitions and investments totaled $180 million for the nine months ended September 30, 2017 and $172 million for the nine months ended September 30, 2016. AbbVie recorded no IPR&D charges for the three months ended September 30, 2017 and recorded IPR&D chargesupfront payments of ~~$15 million for the nine months ended September 30, 2017. AbbVie recorded IPR&D charges of $80~~$220 million for the three months and ~~$160~~$352 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~

~~In October 2017, AbbVie entered into a global strategic collaboration with Alector, Inc. (Alector) to develop~~2023 and ~~commercialize medicines to treat Alzheimer’s disease~~$222 million for the three and other neurodegenerative disorders. AbbVie and Alector have agreed to research a portfolio of antibody targets and AbbVie has an option to global development and commercial rights to two targets. AbbVie will make an initial upfront payment of $205 million, which will be expensed tosix months ended June 30, 2022. Acquired IPR&D inand milestones expense also included development milestones of $60 million for the ~~fourth quarter of 2017. Alector will conduct exploratory research, drug discovery~~three months and ~~development~~$78 million for ~~lead programs up to~~ the ~~conclusion of~~six months ended June 30, 2023 and $47 million for the ~~proof of concept studies. If~~three months and $62 million for 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.six months ended June 30, 2022.

Note 5Collaborations

The company has ongoing transactions with other entities through collaboration agreements. The following represent the significant collaboration agreements impacting the periods ended June 30, 2023 and 2022.

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 ~~Bruton's~~Bruton’s tyrosine kinase ~~(BTK)~~ 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 following table shows the profit and cost sharing relationship between Janssen and AbbVie:


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
United States - Janssen's share of profits (included in cost of products sold)	$	312	$	404	$	609	$	812
International - AbbVie's share of profits (included in net revenues)	241		283		481		582
Global - AbbVie's share of other costs (included in respective line items)	57		69		112		133

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $268 million at June 30, 2023 and $295 million at December 31, 2022. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $295 million at June 30, 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

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
United States - Janssen's share of profits (included in cost of products sold) $ 268
$ 211
$ 727
$ 540
International - AbbVie's share of profits (included in net revenues) 114
64
306
175
Global - AbbVie's share of other costs (included in respective line items) 75
70
209
195



~~2017~~2023 Form 10-Q \|			128

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 selling, general and administrative (SG&A) expenses and global development costs as part of research and development (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.

The following table shows the profit and cost sharing relationship between Genentech and AbbVie:


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Genentech's share of profits, including royalties (included in cost of products sold)	$	214	$	196	$	416	$	374
AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A)	8		5		19		17
AbbVie's share of development costs (included in R&D)	30		31		58		58

Note 6 Goodwill and Intangible Assets

Goodwill

~~Goodwill~~

The following table summarizes the changes in the carrying amount of goodwill:

(in millions)
Balance as of December 31, 2016 $ 15,416
Foreign currency translation adjustments 332
Balance as of September 30, 2017 $ 15,748


(in millions)
Balance as of December 31, 2022	$	32,156
Foreign currency translation adjustments	68
Balance as of June 30, 2023	$	32,224

The ~~latest~~company performs its annual goodwill impairment assessment ~~of goodwill was completed in the third quarter of 2017. As of September 30, 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 June 30, 2023, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:


	June 30, 2023						December 31, 2022
(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	$	87,702	$	(28,400)	$	59,302	$	87,698	$	(25,003)	$	62,695
License agreements	8,474		(5,207)		3,267		8,474		(4,642)		3,832
Total definite-lived intangible assets	96,176		(33,607)		62,569		96,172		(29,645)		66,527
Indefinite-lived intangible assets	293		—		293		912		—		912
Total intangible assets, net	$	96,469	$	(33,607)	$	62,862	$	97,084	$	(29,645)	$	67,439

September 30, 2017 December 31, 2016
(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 $ 16,456
$ (4,805 ) $ 11,651
$ 16,464
$ (4,256 ) $ 12,208
License agreements 7,869
(1,343 ) 6,526
7,809
(1,110 ) 6,699
Total definite-lived intangible assets 24,325
(6,148 ) 18,177
24,273
(5,366 ) 18,907
Indefinite-lived research and development 9,990
—
9,990
9,990
—
9,990
Total intangible assets, net $ 34,315
$ (6,148 ) $ 28,167
$ 34,263
$ (5,366 ) $ 28,897

Definite-Lived Intangible Assets

Amortization expense was ~~$268 million~~$2.1 billion for the three months and ~~$808 million~~$4.0 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$208 million~~$1.8 billion for the three months and ~~$554 million~~$3.7 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

~~For the nine months ended September 30, 2017, no~~The company monitors intangible assets for impairment ~~charges were recorded to~~on a quarterly basis. The definite-lived intangible ~~assets. For the nine months ended September 30, 2016, an impairment charge of $39 million was recorded~~asset related to ~~certain developed product rights~~Imbruvica in the United States ~~due~~has a carrying value of $4.3 billion as of June 30, 2023. Estimated future cash flows are not significantly higher than the intangible asset’s carrying value, reflecting the company’s current expectations of the impact of the Inflation Reduction Act


2023 Form 10-Q \|			9

of 2022. Future changes to ~~a decline in~~ the ~~market for~~company’s estimates of the ~~product. The fair value was determined based on a discounted cash flow analysis~~impact of the Inflation Reduction Act and the ~~charge was included~~potential of government selection for price negotiations as well as regulatory, market and competitive developments could unfavorably impact the company’s ability to recover the carrying value of the related intangible asset. It is reasonably possible that an intangible asset impairment may occur in ~~cost~~future periods, which may have a material effect on AbbVie’s results of ~~products sold in the condensed consolidated statement of earnings.~~operations.

Indefinite-Lived Intangible Assets

~~The indefinite-lived~~Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The indefinite-lived intangible assets as of September 30, 2017 and December 31, 2016 primarily related to the acquisitions of Stemcentrx and BI compounds. See Note 4 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 for the nine months ended September 30, 2017 and 2016. 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 condensed consolidated statement of earnings for the first quarter of 2023.

Note 7 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 $2.4 billion through June 30, 2023. These costs consist 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.

The following table summarizes the charges (benefits) associated with the Allergan acquisition integration plan:


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Cost of products sold	$	32	$	26	$	46	$	57
Research and development	1		1		1		10
Selling, general and administrative	51		76		95		146
Total charges	$	84	$	103	$	142	$	213

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the six months ended June 30, 2023:


(in millions)
Accrued balance as of December 31, 2022	$	107
Charges	135
Payments and other adjustments	(195)
Accrued balance as of June 30, 2023	$	47



~~2017~~2023 Form 10-Q \|			1310

~~Note 7~~Other Restructuring ~~Plans~~

AbbVie recorded restructuring charges of $7$18 million for the three months and ~~$34~~$45 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and $5$36 million for the three months and ~~$35~~$93 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022.

(in millions)
Accrued balance as of December 31, 2016 $ 87
Restructuring charges 34
Payments and other adjustments (65 )
Accrued balance as of September 30, 2017 $ 56

Note 8 Financial Instruments and Fair Value Measures

Risk Management Policy

See Note 1011 to the ~~company's~~company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2022 for a summary of ~~AbbVie's~~AbbVie’s risk management policy and use of derivative instruments.

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 ~~$3.0~~$2.2 billion at ~~September~~June 30, ~~2017~~2023 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 ~~eighteen~~18 months. Accumulated gains and losses as of ~~September~~June 30, ~~2017 will be~~2023 are reclassified from accumulated other comprehensive ~~loss~~income (loss) (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 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 are included in AOCI and are 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 gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling ~~$7.4~~$10.7 billion at ~~September~~June 30, ~~2017~~2023 and ~~$6.6~~$6.5 billion at December 31, ~~2016.~~

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, the~~The company ~~issued €3.6 billion~~had an aggregate principal amount of senior Euro notes designated as net investment hedges of €5.4 billion at June 30, 2023 and €5.9 billion at December 31, 2022. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling €4.2 billion, SEK1.4 billion, CAD750 million and CHF50 million at June 30, 2023 and €4.3 billion, SEK2.0 billion, CAD750 million and CHF90 million at December 31, 2022. The company uses the ~~principal amounts~~spot method of ~~this foreign denominated debt~~assessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in ~~AOCI.~~AOCI and the

~~AbbVie~~


2023 Form 10-Q \|			11

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.

The company is a party to interest rate ~~hedge~~swap contracts designated as fair value hedges with notional amounts totaling ~~$11.8~~$5.0 billion at ~~September~~June 30, ~~2017~~2023 and $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.



~~2017 Form 10-Q~~ \|	14

Prepaid expenses and

While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.

The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive ~~income/(loss):~~loss:


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Foreign currency forward exchange contracts
Designated as cash flow hedges	$	14	$	53	$	5	$	47
Designated as net investment hedges	6		304		(88)		386
Cross-currency swap contracts designated as cash flow hedges	9		—		9		—
Interest rate swap contracts designated as cash flow hedges	—		2		—		6

Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized ~~a pre-tax loss~~ in other comprehensive ~~income (loss)~~loss pre-tax gains of ~~$142~~$36 million for the three months and ~~$481~~pre-tax losses of $126 million for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2023 and pre-tax gains of $402 million for the three months and pre-tax gains of $501 million for the six months ended June 30, 2022.



~~2017 Form 10-Q~~ \|	15


		Three months ended June 30,				Six months ended June 30,
(in millions)	Statement of earnings caption	2023		2022		2023		2022
Foreign currency forward exchange contracts
Designated as cash flow hedges	Cost of products sold	$	26	$	18	$	56	$	26
Designated as net investment hedges	Interest expense, net	29		24		57		38
Not designated as hedges	Net foreign exchange loss	4		(123)		34		(164)
Treasury rate lock agreements designated as cash flow hedges	Interest expense, net	6		6		12		12
Cross-currency swap contracts designated as cash flow hedges	Net foreign exchange loss	8		—		8		—
Interest rate swap contracts
Designated as cash flow hedges	Interest expense, net	—		(1)		—		(3)
Designated as fair value hedges	Interest expense, net	(21)		(99)		14		(283)
Debt designated as hedged item in fair value hedges	Interest expense, net	21		99		(14)		283

The fair value hierarchy consists of the following three levels:

•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.

The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of ~~September~~June 30, ~~2017:~~2023:


			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	$	8,759	$	4,697	$	4,062	$	—
Money market funds and time deposits	10		—		10		—
Debt securities	30		—		30		—
Equity securities	131		107		24		—

Cross-currency swap contracts	9		—		9		—
Foreign currency contracts	103		—		103		—

Total assets	$	9,042	$	4,804	$	4,238	$	—
Liabilities
Interest rate swap contracts	$	378	$	—	$	378	$	—

Foreign currency contracts	164		—		164		—
Contingent consideration	19,151		—		—		19,151
Total liabilities	$	19,693	$	—	$	542	$	19,151



~~2017 Form 10-Q~~ \|	16


			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	$	9,201	$	4,201	$	5,000	$	—
Money market funds and time deposits	21		—		21		—
Debt securities	28		—		28		—
Equity securities	91		59		32		—
Foreign currency contracts	163		—		163		—
Total assets	$	9,504	$	4,260	$	5,244	$	—
Liabilities
Interest rate swap contracts	$	392	$	—	$	392	$	—
Foreign currency contracts	132		—		132		—
Contingent consideration	16,384		—		—		16,384
Total liabilities	$	16,908	$	—	$	524	$	16,384

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. 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 September 30, 2017, a 50 basis point increase/decrease in~~

The fair value of the ~~assumed discount rate would have decreased/increased~~company's contingent consideration liabilities was calculated using the following significant unobservable inputs:


	June 30, 2023		December 31, 2022
(in millions)	Range	Weighted average(a)	Range	Weighted average(a)
Discount rate	4.8% - 5.8%	4.9%	4.7%- 5.1%	4.8%
Probability of payment for unachieved milestones	100% - 100%	100%	100% - 100%	100%
Probability of payment for royalties by indication(b)	89% - 100%	99%	56% - 100%	99%

Projected year of payments	2023 - 2034	2028	2023 - 2034	2028

(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration ~~liabilities by approximately $160 million. Additionally, at September 30, 2017, a five percentage point increase/decrease in~~liabilities.

(b) Excluding approved indications, the ~~assumed~~estimated probability of ~~success across all potential indications would have increased/decreased the value of the contingent consideration liabilities by approximately $340 million.~~payment was 89% at June 30, 2023 and 56% at December 31, 2022.

The change in fair value recognized in net earnings ~~was~~is recorded in other expense, net in the condensed consolidated statements of ~~earnings for both the three and nine months ended September 30, 2017 and 2016.~~earnings.



~~2017 Form 10-Q~~ \|	17


					Basis of fair value measurement
(in millions)	Book value		Approximate fair value		Quoted 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	$	5,203	$	5,096	$	4,816	$	280	$	—
Long-term debt and finance lease obligations, excluding fair value hedges	56,153		51,394		50,869		525		—
Total liabilities	$	61,356	$	56,490	$	55,685	$	805	$	—

Basis of fair value measurement
(in millions) Book Value Approximate fair value
Quoted prices in
active markets for identical assets
(Level 1)

Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Assets
Investments $ 47
$ 47
$ —
$ 2
$ 45
Total assets $ 47
$ 47
$ —
$ 2
$ 45
Liabilities
Short-term borrowings $ 800
$ 800
$ —
$ 800
$ —
Current portion of long-term debt and lease obligations 3,021
3,027
3,004
23
—
Long-term debt and lease obligations, excluding fair value hedges 34,269
35,647
33,575
2,072
—
Total liabilities $ 38,090
$ 39,474
$ 36,579
$ 2,895
$ —


2023 Form 10-Q \|			15

The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, ~~2016~~2022 are shown in the table below:


					Basis of fair value measurement
(in millions)	Book value		Approximate fair value		Quoted 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 hedges	4,152		4,121		3,930		191		—
Long-term debt and finance lease obligations, excluding fair value hedges	59,463		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 value
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 25
25
—
25
—
Long-term debt and lease obligations, excluding fair value hedges 36,778
36,664
34,589
2,075
—
Total liabilities $ 37,180
$ 37,066
$ 34,589
$ 2,477
$ —

~~Investments primarily consist of~~AbbVie 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 of~~remeasures 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 maturities~~amount 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.



~~2017 Form 10-Q~~ \|	18

~~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 $549~~was $124 million as of ~~September~~June 30, ~~2017~~2023 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 generally determined based on prices obtained from commercial pricing services.

~~The following table is a summary of available-for-sale securities by type~~2022. No significant cumulative upward or downward adjustments have been recorded for these investments as of ~~September~~June 30, ~~2017:~~

Amortized Cost Gross unrealized Fair Value
(in millions) Gains Losses
Asset backed securities $ 904
$ 1
$ (2 ) $ 903
Corporate debt securities 1,424
4
(1 ) 1,427
Other debt securities 145
—
—
145
Equity securities 18
41
(2 ) 57
Total $ 2,491
$ 46
$ (5 ) $ 2,532

~~The following table is a summary of 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 securities 961
1
(2 ) 960
Other debt securities 127
—
(1 ) 126
Equity securities 18
60
(2 ) 76
Total $ 1,997
$ 62
$ (9 ) $ 2,050

AbbVie had no other-than-temporary impairments as of September 30, 2017. Net realized gains were $39 million for the three months and $49 million for the nine months ended September 30, 2017. Net realized gains for the three and nine months ended September 30, 2016 were insignificant.

2023.

Concentrations of Risk

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 September 30, 2017 and December 31, 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 $246 million as of September 30, 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 recently 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 $141 million as of September 30, 2017 and $122 million as of December 31, 2016. Outstanding governmental receivables related to Russia, net of allowances for doubtful accounts, were $142 million as of September 30, 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-Q~~ \|	19

Of total net accounts receivable, three U.S. wholesalers accounted for ~~56%~~75% as of ~~September~~June 30, ~~2017~~2023 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.

~~HUMIRA~~Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately ~~66%~~29% of AbbVie’s total net revenues for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~63%~~36% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022.

Debt and Credit Facilities

Long-Term Debt

~~Short-term borrowings included commercial paper~~In January 2023, the company repaid a $1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023. In March 2023, the company repaid a $350 million aggregate principal amount of ~~$800 million~~2.80% senior notes at maturity.

In May 2023, the company repaid $1.0 billion aggregate principal amount of 2.85% senior notes at maturity.

In January 2022, the company repaid $2.9 billion aggregate principal amount of 3.45% senior notes that were scheduled to mature in March 2022. This repayment was made by exercising, under the terms of the notes, 60-day early redemption at 100% of the principal amount.

In February 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.

Short-Term Borrowings

In March 2023, AbbVie entered into an amended and restated five-year revolving credit 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 June 30, 2023, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. No amounts were outstanding under the company's credit facilities as of ~~September~~June 30, ~~2017~~2023 and ~~$377 million as of~~ December 31, ~~2016. The weighted-average interest rate on commercial paper borrowings was 1.2% for the nine months ended September 30, 2017 and 0.6% for the nine months ended September 30, 2016.~~

~~Note 9 Post-Employment Benefits~~2022.


2023 Form 10-Q \|			16

Note 9Post-Employment Benefits

The following ~~is a summary of~~table summarizes net periodic benefit ~~costs~~cost relating to the company’s defined benefit and other post-employment plans:


	Defined benefit plans								Other post- employment plans
	Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022		2023		2022		2023		2022
Service cost	$	67	$	113	$	135	$	229	$	10	$	13	$	18	$	25
Interest cost	109		75		216		149		10		6		19		12
Expected return on plan assets	(182)		(179)		(362)		(359)		—		—		—		—
Amortization of prior service cost (credit)	1		—		1		1		(9)		(9)		(18)		(19)
Amortization of actuarial loss	4		59		8		116		3		6		6		13
Net periodic benefit cost (credit)	$	(1)	$	68	$	(2)	$	136	$	14	$	16	$	25	$	31

The components of net periodic benefit cost other than service cost are included in other expense, net in the condensed consolidated statements of earnings.

Defined
benefit plans Other post-
employment plans
Three months ended
September 30, Nine months ended
September 30, Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016 2017 2016 2017 2016
Service cost $ 59
$ 52
$ 176
$ 158
$ 6
$ 6
$ 19
$ 19
Interest cost 52
50
153
151
6
6
18
18
Expected return on plan assets (96 ) (88 ) (286 ) (266 ) —
—
—
—
Amortization of actuarial losses and prior service costs 27
22
80
64
1
—
1
—
Net periodic benefit cost $ 42
$ 36
$ 123
$ 107
$ 13
$ 12
$ 38
$ 37

~~AbbVie's principal domestic defined benefit plan is the AbbVie Pension Plan. AbbVie made voluntary contributions to this plan of $150 million in both the nine months ended September 30, 2017 and 2016.~~

Stock-Based Compensation



~~2017 Form 10-Q~~ \|	20

~~RSAs,~~ RSUs and Performance Shares

Stock Repurchase Program

Accumulated Other Comprehensive Loss

and post-
employment
benefits

and post-employment
benefits

Other comprehensive ~~income~~loss for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 included foreign currency translation adjustments totaling a gain of ~~$602~~$178 million ~~which was~~ principally due to the impact of the ~~improvement in~~strengthening of the Euro ~~in the nine months ended September 30, 2017~~ on the translation of the company’s Euro-denominated assets ~~denominated in~~and the ~~Euro.~~offsetting impact of net investment hedging activities totaling a loss of $213 million.



~~2017 Form 10-Q~~ \|	21

and post-
employment
benefits

Other comprehensive ~~income~~loss for the ~~nine~~six months ended ~~September~~June 30, ~~2016~~2022 included foreign currency translation adjustments totaling a ~~gain~~loss of ~~$164 million, which was~~$1.1 billion principally due to the impact of the ~~improvement in~~weakening of the Euro ~~and Japanese yen in the nine months ended September 30, 2016~~ on the translation of the company’s Euro-denominated assets ~~denominated in~~and the ~~Euro and Japanese yen.~~offsetting impact of net investment hedging activities totaling a gain of $666 million.

The following table ~~below~~ presents the impact on AbbVie’s condensed consolidated statements of earnings for significant amounts reclassified out of each component of ~~AOCI:~~

Amortization of actuarial losses and other^(a)

Gains on designated cash flow hedges^(b)

Gains on derivative amount excluded from effectiveness testing(a)

Amortization of actuarial losses and other(b)

Gains on foreign currency forward exchange contracts(c)

Gains on treasury rate lock agreements(a)

Gains on cross-currency swap contracts(d)

Losses on interest rate swap contracts(a)

(a) Amounts are included in interest expense, net (see Note 8).

(b) Amounts are included in the computation of net periodic benefit cost (see Note 9).

(d) Amounts are included in net foreign exchange loss (see Note 8).

Note 11 Income Taxes

Due to the potential for resolution of federal, state and foreign examinations and the expiration of various statutes of limitations, it is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next ~~twelve~~12 months by up to ~~$246~~$603 million. At the time of separation, AbbVie and Abbott Laboratories (Abbott) entered into a tax sharing agreement which provides that Abbott is liable for and has indemnified AbbVie against all income tax liabilities for periods prior to the separation.



~~2017~~2023 Form 10-Q \|			2219

Note 12 Legal Proceedings and Contingencies

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.

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 ~~violates~~violated 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 four individual plaintiff lawsuits and two consolidated purported class actions: one brought by ~~three named~~Niaspan direct purchasers ~~of Niaspan~~ and ~~the other~~one brought by ~~ten named end-payor purchasers of Niaspan.~~Niaspan end-payors. The cases are ~~consolidated for pre-trial proceedings~~pending 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 August 2019, the court certified a class of direct purchasers of Niaspan. In June 2020 and August 2021, the court denied the end-payors' motion to certify a class, which was affirmed on appeal by the United States Court of Appeals for the Third Circuit in April 2023. 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 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 FTC~~August 2019, direct purchasers of AndroGel filed ~~suit~~a 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 ~~the~~2006 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 ~~those~~the generic ~~companies violates~~companies.

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 seeks~~Plaintiffs 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 August 2015, the court dismissed the case as time-barred. In December 2016, the appellate court for the state’s appeal remanded for the trial court to determine whether the state is a proper party in interest. On remand, the trial court denied AbbVie’s motion to dismiss.

~~In August 2013, a putative class action lawsuit,~~ ~~Sidney Hillman Health Center of Rochester, et al. v. AbbVie Inc., et al., was filed against AbbVie~~re: Bystolic Antitrust Litigation in the United States District Court for the ~~Northern~~Southern District of ~~Illinois by three healthcare 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 manufacturers generally alleging ~~violations~~



~~2017 Form 10-Q~~ \|	23

~~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, in the United States District Court for the Northern District of Illinois on behalf of all insurance companies, health benefit providers, and other third party payors who paid for TRTs, including AndroGel. The claims asserted include violationscourts. Most of the federal ~~RICO Act and state consumer fraud and deceptive trade practices laws. The complaint seeks monetary damages and injunctive relief. A similar lawsuit,~~ ~~Allied Services Division Welfare Fund v. AbbVie Inc., et al., filed in the same~~ court ~~in October 2015 on behalf of the same putative class members and a putative class of consumers, was voluntarily dismissed in September 2017.~~

~~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 claims are consolidated for pre-trial purposes in the United States District Court for the Northern District of ~~Illinois~~Ohio under the MDL ~~Rules~~rules as In re: ~~Testosterone Replacement Therapy Products Liability~~National Prescription Opiate Litigation,, MDL No. ~~2545.~~2804. Approximately ~~210 claims~~250 matters are pending in various state courts. ~~Plaintiffs~~The plaintiffs in these cases, 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 2,860 lawsuits, approximately 2,420 of them are brought by states, counties, cities, and other municipal entities. Over 98% of these state, city, and other municipal entity plaintiffs have reached settlement agreements with Allergan and their lawsuits are in the process of being dismissed with prejudice. Approximately 20 other lawsuits are brought by approximately 180 Native American Tribes. Over 98% of these Native American Tribes have reached settlement agreements with

Allergan and their lawsuits are in the process of being dismissed with prejudice. 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 related to these settlements.

In ~~July 2017,~~March 2023, AbbVie Inc. filed a ~~jury~~petition 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~~against AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for Humira sales growth in financial filings between 2013 and 2018 were misleading because they omitted alleged misconduct in connection with Humira patient and reimbursement support services and other services and items of value that allegedly induced Humira prescriptions. In September 2021, the court granted plaintiffs' motion to certify a ~~verdict~~class.

Lawsuits were filed against Allergan and certain of its former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants. The lawsuits, which were filed by Allergan shareholders, have been consolidated in the ~~first case~~United States District Court for the Southern District of New York as In re: Allergan plc Securities Litigation. The plaintiffs generally seek compensatory damages and attorneys’ fees. In September 2019, the court partially granted Allergan's motion to ~~be tried. The jury found~~dismiss. In September 2021, the court granted plaintiffs' motion to certify a class. In December 2022, the court granted Allergan's motion for ~~AbbVie~~summary judgment on the ~~plaintiff's strict liability~~remaining claims, dismissing them with prejudice. Plaintiffs are appealing the court's motion to dismiss and ~~negligence claims~~summary judgment rulings.

In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v. Gonzalez et al., and Katcher v. Gonzalez, et al., were filed in the United States District Court for the ~~plaintiff~~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 potential effect that safety information about another company’s product would have on the plaintiff's fraud claim, but awarded no compensatory damages. The jury's award of $150 million in punitive damages without an underlying compensatory damage award will be subject to post-trial briefing.Food and Drug Administration’s approval and labeling for AbbVie’s Rinvoq.

Product Liability and General Litigation

In April 2023, a putative class action lawsuit, Camargo v. AbbVie ~~expects the punitive damage award will not stand. In August 2017, a jury in the Circuit Court of Cook County, Illinois, reached a verdict for AbbVie on all claims. In October 2017, a jury~~Inc., was filed in the United States District Court for the Northern District of Illinois reached a verdict for AbbVie on strict liability but for the plaintiff on remaining claims and awarded $140,000 in compensatory damages and $140 million in punitive damages, which will be the subject of post-trial proceedings.

~~In November 2014, five individuals filed a putative class action lawsuit,~~ ~~Rubinstein, et al. 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~~Humira patients who paid for Humira based on its ~~chief executive officer in the United States District Court for the Northern District of Illinois~~list price or who, after losing insurance coverage, discontinued Humira because they could not pay based on its list price, alleging that ~~the defendants made and/or are responsible for material misstatements~~Humira’s list price is excessive in violation of ~~federal securities laws in connection with AbbVie's proposed transaction with Shire.~~multiple states’ unfair and deceptive trade practices statutes. The plaintiff generally seeks monetary damages, injunctive relief, and attorneys’ fees.

In ~~June 2016,~~2018, a qui tam lawsuit, ~~Elliott Associates, L.P.~~U.S. ex rel. Silbersher v. Allergan Inc., et al. ~~v. AbbVie Inc.~~, was filed ~~by five investment funds against AbbVie in the Cook County, Illinois Circuit Court alleging that AbbVie made misrepresentations and omissions in connection with its proposed t~~ransaction with Shire. Similar lawsuits were filed between July and September 2017 against AbbVie and in some instances its chief executive officer in the same court by twelve additional investment funds. Plaintiffs seek compensatory and punitive damages.

~~In May 2017, a shareholder derivative lawsuit,~~ ~~Ellis v. Gonzalez, 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.

AbbVie 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 2016, AbbVie alleged that Amgen Inc.’s and Amgen Manufacturing, Limited’s proposed biosimilar adalimumab product infringed certain AbbVie patents. AbbVie sought declaratory and injunctive relief. In September 2017, the parties settled this case and it was dismissed without prejudice.



~~2017 Form 10-Q~~ \|	24

~~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 Vaccines~~several Allergan entities and ~~Grifols Worldwide seeking a declaratory judgment~~others, alleging that ~~eleven HCV-related patents licensed~~their conduct before the U.S. Patent Office resulted in false claims for payment being made to ~~AbbVie~~federal 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-realtor’s federal law claims with prejudice and state law claims without prejudice. The plaintiff-realtor is appealing the court’s motion to dismiss ruling.

Intellectual Property Litigation

AbbVie Inc. is seeking to enforce ~~certain~~ patent rights ~~related~~relating to ~~adalimumab~~venetoclax (a drug ~~AbbVie sells~~sold under the trademark ~~HUMIRA®)~~Venclexta). ~~In a case~~Litigation was filed in the United States District Court for the District of Delaware in ~~August 2017,~~July 2020 against Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc.: and Alembic Pharmaceuticals Ltd., Alembic Pharmaceuticals, Inc., and Alembic Global Holdings SA. AbbVie alleges ~~that Boehringer Ingelheim International GmbH’s, Boehringer Ingelheim Pharmaceutical, Inc.’s,~~defendants’ proposed generic venetoclax products infringe certain patents and ~~Boehringer Ingelheim Fremont, Inc.’s proposed biosimilar adalimumab product infringes certain AbbVie patents. AbbVie~~ seeks declaratory and injunctive relief. Genentech, Inc., which is in a global collaboration with AbbVie concerning the development and marketing of Venclexta, is the co-plaintiff in this suit.

Note 13 Segment Information

The following table details AbbVie’s worldwide net revenues:


		Three months ended June 30,				Six months ended June 30,

(in millions)		2023		2022		2023		2022
Immunology
Humira	United States	$	3,452	$	4,664	$	6,400	$	8,657
	International	560		699		1,153		1,442
	Total	$	4,012	$	5,363	$	7,553	$	10,099
Skyrizi	United States	$	1,634	$	1,079	$	2,773	$	1,860
	International	249		173		470		332
	Total	$	1,883	$	1,252	$	3,243	$	2,192
Rinvoq	United States	$	645	$	412	$	1,094	$	723
	International	273		180		510		334
	Total	$	918	$	592	$	1,604	$	1,057
Hematologic Oncology
Imbruvica	United States	$	666	$	862	$	1,304	$	1,736
	Collaboration revenues	241		283		481		582
	Total	$	907	$	1,145	$	1,785	$	2,318
Venclexta	United States	$	265	$	253	$	530	$	481
	International	306		252		579		497
	Total	$	571	$	505	$	1,109	$	978
Aesthetics
Botox Cosmetic	United States	$	420	$	449	$	829	$	862
	International	265		246		515		474
	Total	$	685	$	695	$	1,344	$	1,336
Juvederm Collection	United States	$	125	$	147	$	247	$	295
	International	243		197		476		459
	Total	$	368	$	344	$	723	$	754
Other Aesthetics	United States	$	284	$	287	$	530	$	572
	International	47		45		87		83
	Total	$	331	$	332	$	617	$	655
Neuroscience
Botox Therapeutic	United States	$	614	$	557	$	1,201	$	1,057
	International	134		121		266		235
	Total	$	748	$	678	$	1,467	$	1,292
Vraylar	United States	$	657	$	492	$	1,217	$	919
	International	1		—		2		—
	Total	$	658	$	492	$	1,219	$	919
Duodopa	United States	$	24	$	26	$	49	$	50
	International	93		94		186		191
	Total	$	117	$	120	$	235	$	241
Ubrelvy	United States	$	194	$	185	$	344	$	323
	International	2		—		4		—
	Total	$	196	$	185	$	348	$	323

Three months ended
September 30, Nine months ended
September 30,
(in millions) 2017 2016 2017 2016
HUMIRA $ 4,701
$ 4,060
$ 13,535
$ 11,786
IMBRUVICA 688
501
1,865
1,321
HCV 276
378
764
1,211
Lupron 201
193
605
602
Creon 215
187
596
517
Synagis 116
96
456
460
Synthroid 191
188
576
558
AndroGel 147
174
437
501
Kaletra 85
137
310
416
Sevoflurane 100
102
311
327
Duodopa 94
74
255
215
All other 181
342
767
928
Total net revenues $ 6,995
$ 6,432
$ 20,477
$ 18,842



~~2017~~2023 Form 10-Q \|			2522


		Three months ended June 30,				Six months ended June 30,

(in millions)		2023		2022		2023		2022
Qulipta	United States	$	95	$	33	$	161	$	44
	International	1		—		1		—
	Total	$	96	$	33	$	162	$	44
Other Neuroscience	United States	$	65	$	145	$	140	$	318
	International	5		5		9		9
	Total	$	70	$	150	$	149	$	327
Eye Care
Ozurdex	United States	$	34	$	36	$	73	$	69
	International	85		74		161		148
	Total	$	119	$	110	$	234	$	217
Lumigan/Ganfort	United States	$	51	$	60	$	114	$	127
	International	68		70		135		143
	Total	$	119	$	130	$	249	$	270
Alphagan/Combigan	United States	$	32	$	54	$	60	$	124
	International	33		38		76		75
	Total	$	65	$	92	$	136	$	199
Restasis	United States	$	82	$	151	$	161	$	386
	International	17		17		30		28
	Total	$	99	$	168	$	191	$	414
Other Eye Care	United States	$	110	$	106	$	220	$	197
	International	105		111		195		191
	Total	$	215	$	217	$	415	$	388
Other Key Products
Mavyret	United States	$	193	$	203	$	364	$	372
	International	194		195		387		406
	Total	$	387	$	398	$	751	$	778
Creon	United States	$	282	$	318	$	587	$	605
Linzess/Constella	United States	$	269	$	247	$	520	$	480
	International	9		8		17		15
	Total	$	278	$	255	$	537	$	495



All other		$	741	$	1,009	$	1,432	$	2,220
Total net revenues		$	13,865	$	14,583	$	26,090	$	28,121


2023 Form 10-Q \|			23

ITEM 2. 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 ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016~~2022 and the results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016.~~2022. This commentary should be read in conjunction with the ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

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 use~~positioned 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’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, virology, oncology and neurology, with additional targeted investment in cystic fibrosis and women’s health.

~~AbbVie’s~~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 directly~~AbbVie sells products primarily to ~~customers~~wholesalers or through distributors, and depending on the market ~~served.~~works through largely centralized national payers system 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 ~~29,000~~50,000 employees. ~~AbbVie operates in one business segment—pharmaceutical products.~~

~~2017~~2023 Strategic Objectives

~~AbbVie’s~~AbbVie's mission is to ~~be an innovation-driven, patient-focused specialty biopharmaceutical company capable~~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 and a consistent stream of innovative new medicines.~~execution. AbbVie intends to ~~continue to~~execute its strategy and advance its mission in a number of ways, including: (i) ~~growing revenues through continued~~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 ~~performance from its existing portfolio~~commercial execution of ~~on-market products, including its flagship brands, HUMIRA~~new product launches; (iii) continuing to invest in and ~~IMBRUVICA as well as growth from pipeline products; (ii) expanding operating margins; (iii) continued investment in~~expand its pipeline in support of opportunities in immunology, oncology, ~~virology~~aesthetics, neuroscience and ~~neurology~~eye care as well as continued investment in key on-market products; (iv) ~~augmentation of its pipeline through concerted focus on strategic licensing, acquisition~~generating substantial operating cash flows to support investment in innovative research and ~~partnering activity with a focus on identifying compelling programs that fit AbbVie’s strategic criteria;~~development, and ~~(v) returning~~return cash to shareholders via ~~dividends~~a strong and ~~share repurchases.~~growing dividend while also reducing debt. In addition, AbbVie anticipates several regulatory submissions and ~~key~~ data readouts from key clinical trials in the next ~~twelve~~12 months.

Financial Results

The company's financial performance for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 included delivering worldwide net revenues of ~~$20.5~~$26.1 billion, operating earnings of ~~$7.8~~$7.3 billion, ~~and~~ diluted earnings per share of ~~$3.27.~~$1.26 and cash flows from operations of $10.5 billion. Worldwide net revenues ~~grew by 9%~~decreased 7% on a reported basis and 6% on a constant currency basis, driven primarily by the continued strength of HUMIRA, revenue growth related to IMBRUVICA and revenue growth from other key products including Creon and Duodopa. These increases were partially offset by a decline in net revenues of HCV product VIEKIRA.basis.

Diluted earnings per share was ~~$3.27~~$1.26 for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and included the following after-tax costs: (i) ~~$606 million~~$3.4 billion related to the amortization of intangible assets; (ii) ~~$546 million~~$3.3 billion for the change in fair value of contingent consideration liabilities; and (iii) ~~milestone payments of $68 million; (iv) litigation reserve charges of $65 million; (v) acquisition~~$629 million related ~~costs of $49 million; and (vi) $15 million for acquired in-process research and development (IPR&D).~~ to intangible asset impairment.Additionally, financial results ~~for the nine months ended September 30, 2017~~ reflected continued ~~added~~ funding to support all stages of AbbVie’s ~~emerging mid- and late-stage~~ pipeline assets and continued investment in AbbVie’s ~~growth~~on-market brands.



~~2017 Form 10-Q~~ \|	26

The company generated cash flows from operations of $7.4 billion for the nine months ended September 30, 2017, which AbbVie utilized to continue to enhance its pipeline through licensing and collaboration activities, pay cash dividends to stockholders of $3.1 billion and repurchase approximately 7.8 million shares for $500 million in the open market. In September 2017, AbbVie’s board of directors declared a quarterly cash dividend of $0.64 per share of common stock payable in November 2017. In October 2017, the company 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 in February 2018. This reflects an increase of approximately 11% over the previous quarterly rate.

~~In addition to these financial results, AbbVie continued to advance and augment its pipeline as further described below under the heading “Research and Development.”~~

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 60~~approximately 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, ~~virology~~aesthetics, neuroscience and ~~neurology along with targeted investments in cystic fibrosis and women’s health.~~eye care. Of these programs, ~~more than 30~~over 50 are in mid- and late-stage development.


2023 Form 10-Q \|			24

The following sections summarize transitions of significant programs from ~~Phase 2~~mid-stage development to ~~Phase 3~~late-stage development as well as developments in significant ~~Phase 3~~late-stage and registration programs. AbbVie expects multiple ~~Phase 2~~mid-stage programs to transition into ~~Phase 3~~late-stage programs in the next ~~twelve~~12 months.

Significant Programs and Developments

Immunology

Rinvoq

~~Upadacitinib~~•In 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.

•In ~~June 2017,~~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~~treatment of adults with ~~moderate~~moderately to ~~severe RA~~severely active Crohn’s disease 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 respondhave had an inadequate response, lost response or were intolerant to ~~treatment with~~either conventional therapy or a 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.~~agent.

~~Risankizumab~~

•In October 2017, 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 compared to ustekinumab and adalimumab met all co-primary and ranked secondary endpoints for the treatment of patients with moderate to severe chronic plaque psoriasis. The safety profile was consistent with all previously reported studies, and there were no new safety signals detected across the three studies.



~~2017 Form 10-Q~~ \|	27

~~Oncology~~

~~IMBRUVICA~~

~~In January 2017,~~May 2023, AbbVie announced that the U.S. Food and Drug Administration (FDA) approved ~~IMBRUVICA~~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 and/or one approved non-anti-TNF inhibitor therapy for HS.

Skyrizi

•In March 2023, AbbVie announced positive top-line results from its Phase 3 induction study, INSPIRE, for Skyrizi in patients with ~~relapsed/~~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 plaque 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.

Oncology

Epkinly

•In March 2023, AbbVie initiated a Phase 3 clinical trial to evaluate epcoritamab in combination with R-CHOP compared to R-CHOP in patients with newly diagnosed diffuse large B-cell lymphoma (DLBCL).

•In May 2023, AbbVie announced that the FDA approved Epkinly (epcoritamab) as the first and only bispecific antibody to treat adult patients with relapsed or refractory (R/R) DLBCL.

•In July 2023, AbbVie announced that the CHMP of the EMA has adopted a positive opinion recommending the granting of conditional marketing authorization for epcoritamab as a monotherapy for the treatment of adult patients with R/R DLBCL after two or more lines of systemic therapy.

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 ~~indication~~voluntary action is ~~approved under~~due to requirements related to the accelerated approval ~~based~~status granted by the FDA for MCL and MZL. Other approved indications for Imbruvica in the U.S. are not affected.


2023 Form 10-Q \|			25

Navitoclax

•In July 2023, AbbVie announced top-line results from the Phase 3 TRANSFORM-1 clinical trial evaluating the safety and efficacy of navitoclax, a BCL-XL/BCL-2 inhibitor, in combination with ruxolitinib 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 the first ranked secondary endpoint of improvement in patients’ Total Symptom Score from baseline to week 24. The company plans to wait for additional follow up data on ~~overall response rate (ORR)~~the primary, secondary and ~~continued approval may be contingent upon verification and description~~other endpoints, expected in the fourth quarter of ~~clinical benefit in a confirmatory trial. MZL is a slow-growing form of non-Hodgkin's lymphoma.~~this year, before engaging with regulatory agencies regarding potential next steps.

Aesthetics

Juvederm Collection

•In ~~August 2017,~~May 2023, AbbVie announced that the FDA approved ~~IMBRUVICA for~~Skinvive by Juvederm to improve skin smoothness of the ~~treatment~~cheeks in adults over the age 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 marks the sixth U.S. disease indication for IMBRUVICA since the medication's initial approval in 2013 and the first approved indication outside of cancer.21.

Neuroscience

~~Venetoclax~~ABBV-951

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

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 MURANO 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.

~~Rova-T~~

In February 2017, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy of 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.

~~Veliparib~~

In April 2017, AbbVie announced that two Phase 3 studies evaluating veliparib, an investigational, oral poly (adenosine diphosphate-ribose) polymerase (PARP) inhibitor in combination with chemotherapy did not meet their primary endpoints. The studies evaluated veliparib in combination with carboplatin and paclitaxel in patients with squamous non-small cell lung cancer (NSCLC) and triple negative breast cancer (TNBC). Ongoing Phase 3 studies include non-squamous non-small cell lung cancer, BRCA1/2 breast cancer and ovarian cancer.

~~Virology/Liver Disease~~

In February 2017, AbbVie announced that the European Committee for Medicinal Products for Human Use (CHMP) granted a positive opinion for a shorter, eight-week treatment 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, AbbVie announced that 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 indicated for patients with specific treatment challenges, including those with compensated



~~2017 Form 10-Q~~ \|	28

~~cirrhosis across all major genotypes, and those who previously had limited treatment options, such as patients with severe chronic kidney disease (CKD) or those with genotype 3 chronic HCV infection.~~

~~In August 2017,~~March 2023, AbbVie announced that the FDA ~~approved MAVYRET (glecaprevir/pibrentasvir)~~issued a Complete Response Letter (CRL) for the New Drug Application (NDA) for ABBV-951 (foscarbidopa/foslevodopa) for the treatment of ~~patients~~motor fluctuations in adults with ~~chronic HCV genotype 1-6 infection without cirrhosis~~advanced Parkinson’s disease. In its letter, the FDA requested additional information about the device (pump) as part of the NDA review. The CRL did not request that AbbVie conduct additional efficacy and ~~with compensated cirrhosis (Child-Pugh A). MAVYRET is also indicated~~safety trials related to the drug.

Qulipta

•In April 2023, AbbVie announced that the FDA approved Qulipta for the preventive treatment of adult patients 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. MAVYRET/MAVIRET is a new 8-week, pan-genotypic treatment for patients without cirrhosis and who are new to treatment.chronic migraine in adults.

~~Other~~

•In ~~September 2017,~~June 2023, AbbVie announced that ~~it had submitted~~the CHMP of the EMA has adopted a ~~New Drug Application to~~positive opinion recommending the ~~FDA for elagolix, an investigational, orally administered gonadotropin-releasing hormone (GnRH) antagonist, being evaluated~~approval of Qulipta for the ~~management~~prophylaxis of ~~endometriosis with associated pain. In October, AbbVie was granted priority review for elagolix by the FDA.~~

migraine in adults who have four or more migraine days per month.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022.


2023 Form 10-Q \|			26

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.


	Three months ended June 30,				Percent change				Six months ended June 30,				Percent change
					At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)	2023		2022						2023		2022
United States	$	10,720	$	11,410	(6.0)	%	(6.0)	%	$	19,921	$	21,758	(8.4)	%	(8.4)	%
International	3,145		3,173		(0.9)	%	2.6	%	6,169		6,363		(3.0)	%	1.8	%
Net revenues	$	13,865	$	14,583	(4.9)	%	(4.2)	%	$	26,090	$	28,121	(7.2)	%	(6.1)	%



~~2017~~2023 Form 10-Q \|			2927

The following table details AbbVie’s worldwide net revenues:


		Three months ended June 30,				Percent change				Six months ended June 30,				Percent change
						At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)		2023		2022						2023		2022
Immunology
Humira	United States	$	3,452	$	4,664	(26.0)	%	(26.0)	%	$	6,400	$	8,657	(26.1)	%	(26.1)	%
	International	560		699		(19.8)	%	(17.0)	%	1,153		1,442		(20.1)	%	(15.9)	%
	Total	$	4,012	$	5,363	(25.2)	%	(24.8)	%	$	7,553	$	10,099	(25.2)	%	(24.6)	%
Skyrizi	United States	$	1,634	$	1,079	51.4	%	51.4	%	$	2,773	$	1,860	49.1	%	49.1	%
	International	249		173		44.2	%	48.6	%	470		332		41.5	%	48.2	%
	Total	$	1,883	$	1,252	50.4	%	51.0	%	$	3,243	$	2,192	48.0	%	49.0	%
Rinvoq	United States	$	645	$	412	56.4	%	56.4	%	$	1,094	$	723	51.2	%	51.2	%
	International	273		180		52.2	%	57.5	%	510		334		52.9	%	61.0	%
	Total	$	918	$	592	55.1	%	56.7	%	$	1,604	$	1,057	51.7	%	54.2	%
Hematologic Oncology
Imbruvica	United States	$	666	$	862	(22.8)	%	(22.8)	%	$	1,304	$	1,736	(24.9)	%	(24.9)	%
	Collaboration revenues	241		283		(14.7)	%	(14.7)	%	481		582		(17.3)	%	(17.3)	%
	Total	$	907	$	1,145	(20.8)	%	(20.8)	%	$	1,785	$	2,318	(23.0)	%	(23.0)	%
Venclexta	United States	$	265	$	253	5.2	%	5.2	%	$	530	$	481	10.2	%	10.2	%
	International	306		252		21.0	%	24.9	%	579		497		16.5	%	22.1	%
	Total	$	571	$	505	13.1	%	15.0	%	$	1,109	$	978	13.4	%	16.2	%
Aesthetics
Botox Cosmetic	United States	$	420	$	449	(6.5)	%	(6.5)	%	$	829	$	862	(3.8)	%	(3.8)	%
	International	265		246		7.9	%	13.8	%	515		474		8.7	%	15.7	%
	Total	$	685	$	695	(1.4)	%	0.7	%	$	1,344	$	1,336	0.6	%	3.1	%
Juvederm Collection	United States	$	125	$	147	(14.5)	%	(14.5)	%	$	247	$	295	(16.2)	%	(16.2)	%
	International	243		197		22.8	%	27.6	%	476		459		3.6	%	11.1	%
	Total	$	368	$	344	6.9	%	9.7	%	$	723	$	754	(4.1)	%	0.4	%
Other Aesthetics	United States	$	284	$	287	(1.3)	%	(1.3)	%	$	530	$	572	(7.4)	%	(7.4)	%
	International	47		45		6.8	%	12.0	%	87		83		5.3	%	12.3	%
	Total	$	331	$	332	(0.2)	%	0.5	%	$	617	$	655	(5.8)	%	(4.9)	%
Neuroscience
Botox Therapeutic	United States	$	614	$	557	10.1	%	10.1	%	$	1,201	$	1,057	13.6	%	13.6	%
	International	134		121		10.7	%	17.0	%	266		235		13.0	%	20.4	%
	Total	$	748	$	678	10.2	%	11.3	%	$	1,467	$	1,292	13.5	%	14.9	%
Vraylar	United States	$	657	$	492	33.7	%	33.7	%	$	1,217	$	919	32.5	%	32.5	%
	International	1		—		>100.0 %		>100.0 %		2		—		>100.0 %		>100.0 %
	Total	$	658	$	492	33.9	%	33.9	%	$	1,219	$	919	32.7	%	32.7	%
Duodopa	United States	$	24	$	26	(7.6)	%	(7.6)	%	$	49	$	50	(0.8)	%	(0.8)	%
	International	93		94		(1.6)	%	(0.5)	%	186		191		(3.0)	%	0.6	%
	Total	$	117	$	120	(2.9)	%	(2.0)	%	$	235	$	241	(2.5)	%	0.3	%
Ubrelvy	United States	$	194	$	185	4.5	%	4.5	%	$	344	$	323	6.4	%	6.4	%
	International	2		—		n/m		n/m		4		—		n/m		n/m
	Total	$	196	$	185	5.9	%	6.0	%	$	348	$	323	7.7	%	7.7	%
Qulipta	United States	$	95	$	33	>100.0 %		>100.0 %		$	161	$	44	>100.0 %		>100.0 %
	International	1		—		n/m		n/m		1		—		n/m		n/m
	Total	$	96	$	33	>100.0 %		>100.0 %		$	162	$	44	>100.0 %		>100.0 %
Other Neuroscience	United States	$	65	$	145	(55.9)	%	(55.9)	%	$	140	$	318	(56.3)	%	(56.3)	%
	International	5		5		4.7	%	11.4	%	9		9		5.7	%	12.0	%
	Total	$	70	$	150	(53.8)	%	(53.6)	%	$	149	$	327	(54.6)	%	(54.4)	%

Three months ended
September 30, Percent change Nine months ended
September 30, Percent change
At actual
currency rates At constant
currency rates At actual
currency rates At constant
currency rates
(dollars in millions) 2017 2016 2017 2016
HUMIRA
United States $ 3,151
$ 2,647
19.1 % 19.1 % $ 9,048
$ 7,554
19.8 % 19.8 %
International 1,550
1,413
9.7 % 6.8 % 4,487
4,232
6.0 % 6.8 %
Total $ 4,701
$ 4,060
15.8 % 14.8 % $ 13,535
$ 11,786
14.8 % 15.1 %
IMBRUVICA
United States $ 574
$ 437
31.0 % 31.0 % $ 1,559
$ 1,146
36.0 % 36.0 %
Collaboration revenues 114
64
80.7 % 80.7 % 306
175
75.4 % 75.4 %
Total $ 688
$ 501
37.3 % 37.3 % $ 1,865
$ 1,321
41.2 % 41.2 %
HCV
United States $ 60
$ 76
(19.5 )% (19.5 )% $ 124
$ 288
(56.6 )% (56.6 )%
International 216
302
(28.7 )% (29.8 )% 640
923
(30.7 )% (30.5 )%
Total $ 276
$ 378
(26.8 )% (27.7 )% $ 764
$ 1,211
(36.9 )% (36.7 )%
Lupron
United States $ 161
$ 155
4.1 % 4.1 % $ 488
$ 485
0.6 % 0.6 %
International 40
38
3.5 % 1.6 % 117
117
(0.1 )% (0.5 )%
Total $ 201
$ 193
4.0 % 3.6 % $ 605
$ 602
0.5 % 0.4 %
Creon
United States $ 215
$ 187
14.8 % 14.8 % $ 596
$ 517
15.3 % 15.3 %
Synagis
International $ 116
$ 96
21.0 % 23.5 % $ 456
$ 460
(0.8 )% (1.7 )%
Synthroid
United States $ 191
$ 188
1.5 % 1.5 % $ 576
$ 558
3.1 % 3.1 %
AndroGel
United States $ 147
$ 174
(14.9 )% (14.9 )% $ 437
$ 501
(12.7 )% (12.7 )%
Kaletra
United States $ 16
$ 27
(39.2 )% (39.2 )% $ 54
$ 90
(39.9 )% (39.9 )%
International 69
110
(38.2 )% (40.4 )% 256
326
(21.7 )% (24.3 )%
Total $ 85
$ 137
(38.4 )% (40.2 )% $ 310
$ 416
(25.7 )% (27.7 )%
Sevoflurane
United States $ 19
$ 19
0.5 % 0.5 % $ 56
$ 58
(2.4 )% (2.4 )%
International 81
83
(3.4 )% (3.3 )% 255
269
(5.5 )% (3.8 )%
Total $ 100
$ 102
(2.7 )% (2.6 )% $ 311
$ 327
(4.9 )% (3.5 )%
Duodopa
United States $ 16
$ 10
56.4 % 56.4 % $ 44
$ 26
70.8 % 70.8 %
International 78
64
21.5 % 16.6 % 211
189
11.7 % 12.3 %
Total $ 94
$ 74
26.3 % 22.0 % $ 255
$ 215
18.7 % 19.2 %
All other $ 181
$ 342
(46.9 )% (47.4 )% $ 767
$ 928
(17.4 )% (17.1 )%
Total net revenues $ 6,995
$ 6,432
8.8 % 8.1 % $ 20,477
$ 18,842
8.7 % 8.8 %


2023 Form 10-Q \|			28


		Three months ended June 30,				Percent change				Six months ended June 30,				Percent change
						At actual currency rates		At constant currency rates						At actual currency rates		At constant currency rates
(dollars in millions)		2023		2022						2023		2022
Eye Care
Ozurdex	United States	$	34	$	36	(3.3)	%	(3.3)	%	$	73	$	69	6.3	%	6.3	%
	International	85		74		14.2	%	16.6	%	161		148		8.7	%	13.4	%
	Total	$	119	$	110	8.6	%	10.2	%	$	234	$	217	8.0	%	11.2	%
Lumigan/Ganfort	United States	$	51	$	60	(13.1)	%	(13.1)	%	$	114	$	127	(9.7)	%	(9.7)	%
	International	68		70		(3.9)	%	(1.1)	%	135		143		(5.6)	%	(1.9)	%
	Total	$	119	$	130	(8.1)	%	(6.6)	%	$	249	$	270	(7.5)	%	(5.5)	%
Alphagan/Combigan	United States	$	32	$	54	(41.7)	%	(41.7)	%	$	60	$	124	(51.8)	%	(51.8)	%
	International	33		38		(13.3)	%	(8.6)	%	76		75		1.4	%	7.4	%
	Total	$	65	$	92	(29.7)	%	(27.7)	%	$	136	$	199	(31.7)	%	(29.4)	%
Restasis	United States	$	82	$	151	(45.8)	%	(45.8)	%	$	161	$	386	(58.4)	%	(58.4)	%
	International	17		17		(0.7)	%	5.2	%	30		28		7.3	%	12.8	%
	Total	$	99	$	168	(41.1)	%	(40.5)	%	$	191	$	414	(54.0)	%	(53.6)	%
Other Eye Care	United States	$	110	$	106	1.9	%	1.9	%	$	220	$	197	11.3	%	11.3	%
	International	105		111		(4.1)	%	—	%	195		191		2.1	%	7.0	%
	Total	$	215	$	217	(1.1)	%	1.0	%	$	415	$	388	6.8	%	9.2	%
Other Key Products
Mavyret	United States	$	193	$	203	(5.0)	%	(5.0)	%	$	364	$	372	(2.2)	%	(2.2)	%
	International	194		195		(0.9)	%	1.9	%	387		406		(4.7)	%	(0.1)	%
	Total	$	387	$	398	(3.0)	%	(1.6)	%	$	751	$	778	(3.5)	%	(1.1)	%
Creon	United States	$	282	$	318	(11.4)	%	(11.4)	%	$	587	$	605	(3.0)	%	(3.0)	%
Linzess/Constella	United States	$	269	$	247	8.6	%	8.6	%	$	520	$	480	8.1	%	8.1	%
	International	9		8		26.7	%	31.1	%	17		15		19.1	%	24.3	%
	Total	$	278	$	255	9.1	%	9.2	%	$	537	$	495	8.5	%	8.7	%
All other		$	741	$	1,009	(26.4)	%	(25.3)	%	$	1,432	$	2,220	(35.5)	%	(34.5)	%
Total net revenues		$	13,865	$	14,583	(4.9)	%	(4.2)	%	$	26,090	$	28,121	(7.2)	%	(6.1)	%

n/m – Not meaningful

The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.

Global ~~HUMIRA~~Humira sales ~~increased 15%~~decreased 25% for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 primarily as a result of market growth across therapeutic categories and geographies as well as favorable pricing in certain geographies.~~2023. In the United States, ~~HUMIRA~~Humira sales ~~increased 19%~~decreased by 26% for the three and six months ended June 30, 2023 primarily driven by direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, Humira revenues decreased 17% for the three months and ~~20%~~16% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~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% for the three months and 49% for the six months ended June 30, 2023 primarily driven by continued strong volume and market share uptake as well as market growth across all indications, ~~and favorable~~partially offset by unfavorable pricing. Internationally, HUMIRA sales increased 7% for both the three and nine months ended September 30, 2017 driven primarily by market growth. AbbVie continues to pursue strategies intended to further differentiate HUMIRA from competing products and add to the sustainability and future growth of HUMIRA.



~~2017 Form 10-Q~~ \|	30

Net revenues for ~~IMBRUVICA~~Rinvoq increased 57% for the three months and 54% for the six months ended June 30, 2023 primarily driven by continued strong volume and market share uptake as well as market growth across all indications, partially offset by unfavorable pricing.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of ~~IMBRUVICA~~Imbruvica profit. ~~Global IMBRUVICA sales increased 37%~~AbbVie's global Imbruvica revenues decreased 21% for the three months and ~~41%~~23% for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 primarily driven by decreased demand and lower market share in the United States as ~~a result of continued penetration of IMBRUVICA~~well as ~~a first-line treatment~~decreased collaboration revenues.

Net revenues for ~~patients with chronic lymphocytic leukemia (CLL)~~Venclexta increased 15% for the three months and 16% for the six months ended June 30, 2023 primarily driven by market growth across all indications as well as favorable pricing. Internationally, net revenues for the three and six months ended June 30, 2023 were also favorably impacted by continued volume and market share uptake.

Net revenues for Botox Cosmetic increased 1% for the three months and 3% for the six months ended June 30, 2023. Internationally, Botox Cosmetic net revenues increased 14% for the three months and 16% for the six months ended June 30, 2023 primarily driven

~~Global HCV sales~~


2023 Form 10-Q \|			29

by increased investment in key markets, including Asia and Latin America, and recovery from COVID-19 in China. In the United States, Botox Cosmetic net revenues decreased 7% for the three months and 4% for the six months ended June 30, 2023 primarily driven by decreased consumer demand and unfavorable pricing due to economic pressures impacting consumer discretionary spending.

Net revenues for Juvederm Collection increased 10% for the three months ended June 30, 2023 and remained flat for the six months ended June 30, 2023. Internationally, Juvederm Collection net revenues increased 28% for the three months and ~~37%~~11% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 as a result of market contraction, lower market share~~2023 primarily driven by increased investment in key markets, including Asia and ~~price erosion of VIEKIRA. These factors were partially offset~~Latin America, and recovery from COVID-19 in China. In the United States, Juvederm Collection net revenues decreased 15% for the three months and 16% for the six months ended June 30, 2023 primarily driven by ~~the launch of MAVYRET in certain geographies during the third quarter of 2017.~~

decreased consumer demand due to economic pressures impacting consumer discretionary spending.

Net revenues for ~~Creon~~Botox Therapeutic increased 11% for the three months and 15% for ~~both~~the six months ended June 30, 2023 primarily driven by market growth as well as market share uptake. Net revenues for the six months ended June 30, 2023 were also favorably impacted by the timing of shipments.

Net revenues for Vraylar increased 34% for the three months and 33% for the six months ended June 30, 2023 primarily driven by continued volume and market share uptake as well as market growth. Net revenues for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 were also favorably impacted by the recent regulatory approval of Vraylar as an adjunctive therapy to antidepressants for the treatment of major depressive disorder in adults.

Net revenues for Ubrelvy increased 6% for the three months and 8% for the six months ended June 30, 2023 primarily driven ~~primarily~~ by continued volume and market ~~growth~~share uptake as well as market growth.

Net revenues for Qulipta increased greater than 100% for the three and ~~higher~~six months ended June 30, 2023 primarily driven by continued strong volume and market ~~share. Creon maintains~~share uptake as well as market ~~leadership in the pancreatic enzyme market.~~

~~Synagis is a seasonal product with the majority of sales occurring in the first and fourth quarters. Synagis~~growth. Net revenues ~~increased 23%~~ for the three months ended ~~September~~June 30, ~~2017 primarily due to seasonal acceleration in certain geographies and tender timing. Synagis revenues~~2023 were also favorably impacted by the recent regulatory approval of Qulipta for the ~~nine months ended September 30, 2017 decreased 2%.~~preventative treatment of chronic migraine in adults.

~~Net revenues for Duodopa increased 22% for the three months and 19% for the nine months ended September 30, 2017 primarily as a result of market penetration and geographic expansion.~~

Gross Margin

Three months ended
September 30, Nine months ended
September 30,
(dollars in millions) 2017 2016 % change 2017 2016 % change
Gross margin $ 5,379
$ 4,928
9 % $ 15,717
$ 14,564
8 %
as a % of net revenues 77 % 77 % 77 % 77 %


	Three months ended June 30,								Six months ended June 30,
(dollars in millions)	2023			2022			% change		2023			2022			% change
Gross margin	$	9,625		$	10,413		(8)	%	$	17,864		$	19,899		(10)	%
as a % of net revenues	69		%	71		%			68		%	71		%

Gross margin as a percentage of net revenues ~~was flat~~decreased for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the prior year. Gross margin percentage for ~~both~~ the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 was ~~favorably~~unfavorably impacted by higher amortization of intangibles and changes in product mix, ~~and operational efficiencies,~~partially offset by the ~~unfavorable~~favorable impact of ~~higher intangible asset amortization and the IMBRUVICA profit sharing arrangement.~~tax law changes in Puerto Rico.

Selling, General and Administrative

Three months ended
September 30,
Nine months ended
September 30,
(dollars in millions) 2017 2016 % change
2017
2016
% change
Selling, general and administrative $ 1,452
$ 1,381
5 % $ 4,324
$ 4,202
3 %
as a % of net revenues 21 % 21 % 21 % 22 %


	Three months ended June 30,								Six months ended June 30,
(dollars in millions)	2023			2022			% change		2023			2022			% change
Selling, general and administrative	$	3,268		$	5,412		(40)	%	$	6,307		$	8,539		(26)	%
as a % of net revenues	24		%	37		%			24		%	30		%

SG&A expenses as a percentage of net revenues ~~was flat~~decreased for the three ~~months~~ and ~~decreased for the nine~~six months ended ~~September~~June 30, ~~2017~~2023 compared to the prior year. SG&A expense percentage ~~for both the three and nine months ended September 30, 2017~~ was favorably impacted by ~~continued leverage from revenue growth, partially offset by new product launch expenses.~~lower litigation reserve charges for the three and six months ended June 30, 2023 as compared to the prior year. Litigation reserve charges were $2.2 billion for the three months and $2.4 billion for the six months ended June 30, 2022. The decrease in SG&A expense percentage for the ~~nine~~three and six months ended ~~September~~June 30, ~~2017~~2023 was partially offset by the unfavorable impact of lower net revenues primarily driven by the Humira loss of exclusivity in the United States.


2023 Form 10-Q \|			30

Research and Development


	Three months ended June 30,								Six months ended June 30,
(dollars in millions)	2023			2022			% change		2023			2022			% change
Research and development	$	1,733		$	1,609		8	%	$	4,025		$	3,106		30	%
as a % of net revenues	12		%	11		%			15		%	11		%

Research and development (R&D) expenses as a percentage of net revenues increased for the three and six months ended June 30, 2023 compared to the prior year. R&D expense percentage for the three and six months ended June 30, 2023 was unfavorably impacted by increased funding to support all stages of the company’s pipeline assets and lower net revenues primarily driven by the Humira loss of exclusivity in the United States. R&D expense percentage for the six months ended June 30, 2023 was also unfavorably impacted by ~~litigation reserve charges~~an intangible asset impairment charge of ~~$97~~$630 million.

Acquired IPR&D and Milestones



~~2017 Form 10-Q~~ \|	31


	Three months ended June 30,				Six months ended June 30,
(dollars in millions)	2023		2022		2023		2022
Upfront charges	$	220	$	222	$	352	$	352
Development milestones	60		47		78		62
Acquired IPR&D and milestones	$	280	$	269	$	430	$	414

~~Research~~Acquired IPR&D and ~~Development and Acquired In-Process Research and Development~~

Three months ended
September 30, Nine months ended
September 30,
(dollars in millions) 2017 2016 % change 2017 2016 % change
Research and development $ 1,222
$ 1,106
11 % $ 3,580
$ 3,176
13 %
as a % of net revenues 17 % 17 % 17 % 17 %
Acquired in-process research and development $ —
$ 80
(100 )% $ 15
$ 160
(91 )%

~~Research and Development(R&D) expenses~~milestones expense for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, 2017 increased compared to the prior year principally due to increased funding to support the company’s emerging mid- and late-stage pipeline assets and the impact of the post-acquisition R&D expenses of Stemcentrx and Boehringer Ingelheim (BI) compounds. These increases were partially offset by lower acquisition related costs, which decreased by $54 million for the three months and $130 million for the nine months ended September 30, 2017 compared to the prior year.

Acquired in-process research and development (IPR&D) expenses reflect upfront payments related to various collaborations. There were no individually significant transactions or cash flows during the three and nine months ended September 30, 2017 and 2016.

~~Other Non-Operating Expenses~~

Interest expense, net was flat for the three months ended September 30, 2017 compared to the prior year. The increase for the nine months ended September 30, 2017 compared to the prior year was primarily due to the May 2016 issuance of $7.8 billion aggregate principal amount of senior notes, which were issued to finance the acquisition of Stemcentrx and to repay an outstanding term loan.

~~Net foreign exchange loss for the nine months ended September 30, 2016~~2022 included ~~losses totaling $298 million~~a charge related to the ~~devaluation~~upfront payment of ~~AbbVie’s net monetary assets denominated in the Venezuelan bolivar.~~ $130 million to acquire Syndesi Therapeutics SA. See Note 84 to the Condensed Consolidated Financial Statements for additional ~~information regarding~~information.

Other Operating Income

Other operating income for the ~~Venezuelan devaluation.~~three and six months ended June 30, 2023 included a one-time gain of $169 million related to the termination of a development liability associated with a previously divested product. Other operating income for the three and six months ended June 30, 2022 included $172 million of income related to the sale of worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobactor pylori. See Note 4 to the Condensed Consolidated Financial Statements for additional information.

Other Non-Operating Expenses (Income)


	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense	$	552	$	556	$	1,105	$	1,104
Interest income	(98)		(24)		(197)		(33)
Interest expense, net	$	454	$	532	$	908	$	1,071

Net foreign exchange loss	$	37	$	47	$	72	$	72
Other expense, net	1,412		1,533		3,216		757

Interest expense remained flat for the three and six months ended June 30, 2023 compared to the prior year primarily driven by the impact of higher interest rates, offset by lower average debt balances as a result of deleveraging.

Interest income increased for the three and six months ended June 30, 2023 compared to the prior year primarily due to the impact of higher interest rates.

Other expense, net included charges related to changes in fair value of ~~the BI and Stemcentrx~~ contingent consideration liabilities ~~which totaled $401 million~~of $1.6 billion for the three months and ~~$547 million~~$3.4 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2017 compared to $104 million~~2023 and $1.6 billion for the three months and ~~$145~~$861 million for the ~~nine~~six months ended ~~September~~June 30, ~~2016 following the initial recognition of these liabilities in the second quarter of 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 and other market-based factors. For the three and ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2023, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time. The change in fair value for the three months ended June 30, 2023 is also partially offset by higher discount rates. For the three and six


2023 Form 10-Q \|			31

months ended June 30, 2022 the change in fair value represented ~~mainly~~ higher probabilities of success and the passage of time. See Note 4 to the Condensed Consolidated Financial Statements for additional information regarding the acquisitions of Stemcentrx and BI compounds. Other expense, net also included realized gains on available-for-sale investment securities of $39 million for the three months and $49 million for the nine months ended September 30, 2017.estimated Skyrizi sales driven by stronger market share uptake, partially offset by higher discount rates.



~~2017 Form 10-Q~~ \|	32

Income Tax Expense

The effective tax rate was 22% for the three months and ~~20%~~26% for the ~~nine~~six months ended ~~September~~June 30, ~~2017 and 21%~~2023 compared to 22% for the three months and ~~22%~~11% for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the ~~benefit from~~impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, ~~tax exemptions and incentives~~changes in ~~Puerto Rico and other foreign tax jurisdictions~~fair value of contingent consideration and business development ~~activities together with the cost of repatriation decisions.~~activities. The ~~change~~increase in the effective tax rate for ~~both~~ the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2023 over the prior year was ~~principally~~primarily due to changes in ~~the jurisdictional mix~~fair value of ~~earnings, as well as~~contingent consideration, tax law changes in Puerto Rico and impairment of certain discrete factors and events, including collaborations, the impact of the prior year non-deductible devaluation loss related to Venezuela and the impact of the adoption of ASU No. 2016-09, which changed the accounting treatment for excess tax benefits associated with stock-based awards. See Note 1 to the Condensed Consolidated Financial Statements for additional information related to the adoption of this accounting pronouncement.intangible assets.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

Nine months ended
September 30,
(in millions) 2017 2016
Cash flows provided by (used in):
Operating activities $ 7,376
$ 5,500
Investing activities (475 ) (5,955 )
Financing activities (3,584 ) (1,426 )


	Six months ended June 30,
(in millions)	2023		2022
Cash flows provided by (used in):
Operating activities	$	10,512	$	9,913
Investing activities	(840)		(1,461)
Financing activities	(10,112)		(9,651)

Operating cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017 reflected improved results of operations resulting from revenue growth and an improvement in operating earnings as well as favorability from the timing of income tax payments~~2023 increased compared to the prior year. Cash provided by operating activities reflected AbbVie’s voluntary contributions to its principal domestic defined benefit plan of $150 million for both the nine months ended September 30, 2017 and 2016. Realized excess tax benefits associated with stock-based compensation totaled $53 million for the nine months ended September 30, 2017 and were presented within cash flows from operating activities as a result of the adoption of a new accounting pronouncement. In the nine months ended September 30, 2016, prioryear due to the ~~adoption~~timing of ~~the new accounting pronouncement, realized excess tax benefits~~working capital partially offset by decreased results of ~~$47 million were presented within cash flows from financing activities. See Note 1 to the Condensed Consolidated Financial Statements~~operations primarily driven by lower net revenues as well as higher payments for ~~additional information regarding the adoption of this new accounting pronouncement.~~

income taxes.

Investing cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 included ~~net sales~~payments made for acquisitions and ~~maturities~~investments of ~~investment securities totaling $52~~$513 million and capital expenditures of $353 million. ~~For~~Investing cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2016, investing activities primarily~~2022 included ~~$1.9 billion of cash consideration paid to acquire Stemcentrx in June 2016, a $595 million upfront payment to acquire certain BI compounds in April 2016 and~~payments made for net purchases of investment securities totaling ~~$2.9 billion. Cash flows from investing activities for the nine months ended September 30, 2017~~$1.4 billion, acquisitions and ~~2016 also reflected~~investments of $394 million and capital expenditures ~~and other acquisitions and investments.~~

of $305 million.

Financing cash flows for the six months ended June 30, 2023 included repayments of $1.0 billion floating rate term loan, $1.0 billion aggregate principal amount of 2.85% senior notes and $350 million aggregate principal amount of the company’s 2.80% senior notes. Financing cash flows for the six months ended June 30, 2022 included a repayment of $2.9 billion aggregate principal amount of the company’s 3.45% senior notes. Additionally, financing cash flows for the six months ended June 30, 2022 included a repayment of $2.0 billion floating rate term loan due May 2025 and issuance of a new $2.0 billion floating rate term loan as part of the term loan refinancing in February 2022.

Financing cash flows also included cash dividend payments of ~~$3.1~~$5.3 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2023 and ~~$2.8~~$5.0 billion for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2022. The increase in cash dividend payments was primarily driven by anthe increase in the quarterly dividend ~~rate from $0.57 per share to $0.64 per share beginning with~~rate.

On June 22, 2023, the ~~dividend~~company announced that ~~was paid in February 2017. On September 8, 2017, the~~its board of directors declared a quarterly cash dividend of ~~$0.64~~1.48 per share for stockholders of record at the close of business on ~~October 13, 2017,~~July 14, 2023, payable on ~~November~~August 15, 2017. On October 27, 2017, the company 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 reflects an increase of approximately 11% over the previous quarterly rate.2023. 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.

On February 16, 2017, AbbVie's board of directors authorized a $5.0 billion increase to AbbVie's existing stock repurchase program. Under this program, the company repurchased approximately 7.8 million shares for $500 million in the open market in the nine months ended September 30, 2017. Additionally, during the nine months ended September 30, 2017, AbbVie cash-settled $285 million of its open market purchases made at the end of 2016. The company's stock repurchase authorization permits purchases of AbbVie



~~2017 Form 10-Q~~ \|	33

shares from time to time in open-market or private transactions at management's ~~direction depending on the company's cash flows, net debt level and market conditions.~~discretion. The program has no time limit and can be discontinued at any time.

~~During~~ On February 16, 2023, AbbVie’s board of directors authorized a $5.0 billion increase to the ~~nine~~existing stock repurchase authorization. AbbVie repurchased 10 million shares for $1.6 billion during the six months ended ~~September~~June 30, ~~2017~~2023 and ~~2016,~~8 million shares for $1.1 billion during the company issued and redeemed commercial paper. The balance of commercial paper outstanding was $800 million as of September 30, 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 May 2016, the company issued $7.8 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 accelerated share repurchase agreement.

In the third quarter of 2017, AbbVie paid $305 million of contingent consideration to BI related to 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 for the ninesix months ended ~~September~~June 30, ~~2017.~~2022.

Cash and equivalents were impacted by net favorable exchange rate changes totaling $29 million for the nine months ended September 30, 2017 and net unfavorable exchange rate changes totaling $300 million for the nine months ended September 30, 2016. The unfavorable exchange rate changes in 2016 were primarily due to the devaluation of AbbVie’s net monetary assets denominated in the Venezuelan bolivar. While a significant portion of cash and equivalents as of September 30, 2017 were considered reinvested indefinitely in foreign subsidiaries, AbbVie does not expect such reinvestment to affect its liquidity and capital resources. If these funds were needed for operations in the United States, AbbVie would be required to accrue and pay U.S. income taxes to repatriate these funds. AbbVie believes that it has sufficient sources of liquidity to support its assumption that the amount of undistributed earnings as of September 30, 2017 has been reinvested indefinitely.

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 ~~against~~for credit


2023 Form 10-Q \|			32

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.

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 September 30, 2017.



~~2017 Form 10-Q~~ \|	34

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

In March 2023, AbbVie ~~currently has a $3.0 billion~~entered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility ~~which matures in October 2019. The revolving~~commitments 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 ~~September~~June 30, ~~2017,~~2023, the company was in compliance with all ~~its credit facility covenants. Commitment~~covenants, and commitment fees under the credit facility were insignificant. ~~There~~No amounts were ~~no amounts~~ outstanding under the company's credit facility as of ~~September~~June 30, ~~2017~~2023 and December 31, ~~2016.~~

2022.

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 issuing~~has 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’s credit ratings during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2023. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, ~~entitled~~ “Summary of Significant Accounting Policies” ~~to the company’s~~in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2022. There have been no significant changes in the company’s application of its critical accounting policies during the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~

2023.

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q are, or may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions ~~among others,~~and use of future or conditional verbs, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those ~~indicated~~expressed or implied in the forward-looking statements. Such risks and uncertainties include, but are not limited to challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, and changes to laws and regulations applicable to our industry. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2022, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie undertakes no obligation, and specifically declines, to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of the company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in AbbVie's Annual Report on Form 10-K for the year ended December 31, ~~2016.~~

2022.



~~2017~~2023 Form 10-Q \|			3533

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

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~~AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that ~~AbbVie’s~~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~~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~~AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Changes in internal control over financial reporting. There were no changes in ~~AbbVie’s~~AbbVie's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange ~~Act)~~Act of 1934) that have materially affected, or are reasonably likely to materially affect, ~~AbbVie’s~~AbbVie's internal control over financial reporting during the quarter ended ~~September~~June 30, ~~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 ~~error~~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.



~~2017~~2023 Form 10-Q \|			3634

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Information pertaining to legal proceedings is provided in Note 12 to the Condensed Consolidated Financial Statements and is incorporated by reference herein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


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
April 1, 2023 - April 30, 2023	1,006	(1)	$161.23	(1)	—	$4,808,991,028
May 1, 2023 - May 31, 2023	1,105	(1)	$147.29	(1)	—	$4,808,991,028
June 1, 2023 - June 30, 2023	1,194	(1)	$136.06	(1)	—	$4,808,991,028
Total	3,305	(1)	$147.48	(1)	—	$4,808,991,028	(2)

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
July 1, 2017 – July 31, 2017 24,680
⁽¹⁾
$72.78
⁽¹⁾
—
$4,536,288,945
August 1, 2017 – August 31, 2017 2,731
⁽¹⁾
$70.45
⁽¹⁾
—
$4,536,288,945
September 1, 2017 – September 30, 2017 4,266
⁽¹⁾
$83.29
⁽¹⁾
—
$4,536,288,945
Total 31,677
⁽¹⁾
$74.00
⁽¹⁾
—
$4,536,288,945

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 – 3,738 in July; 1,293 in August; and 2,974 in September, with average exercise prices of $72.84 in July; $69.87 in August; and $86.51 in September.

~~These~~ shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan ~~- 20,942~~– 1,006 in ~~July; 1,438~~April; 1,105 in ~~August;~~May; and ~~1,292~~1,194 in ~~September.~~June.

2.On February 16, 2023, AbbVie’s board of directors authorized a $5.0 billion increase to the existing stock repurchase authorization.

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.

ITEM ~~6. EXHIBITS~~5. OTHER ITEMS

During the three months ended June 30, 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.


2023 Form 10-Q \|			35

ITEM 6. EXHIBITS

~~Incorporated by reference~~Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the ~~Exhibit Index included herewith.~~Securities Exchange Act of 1934.


Exhibit No.						Exhibit Description

~~2017~~31.1						Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

31.2						Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).

32.1						Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2						Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed on August 7, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.

104						Cover Page Interactive Data File (the cover page from the AbbVie Inc. Quarterly Report on Form 10-Q formatted as Inline XBRL and contained in Exhibit 101).


2023 Form 10-Q \|			3736

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			ABBVIE INC.


		~~ABBVIE INC.~~


By:		/s/ ~~William J. Chase~~
	~~William J. Chase~~
	~~Executive Vice President,~~
	~~Chief Financial Officer~~

~~Date: November 7, 2017~~

Scott T. Reents
		Scott T. Reents
~~2017 Form 10-Q~~ \|	38	Executive Vice President,
		Chief Financial Officer (Principal Financial Officer)

Date: August 7, 2023

~~EXHIBIT INDEX~~

~~Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.~~



~~Exhibit No.~~		~~Exhibit Description~~

~~31.1~~2023 Form 10-Q \|		~~Certification of Chief Executive Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).~~

~~31.2~~	~~Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).~~
��
~~32.1~~	~~Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~32.2~~	~~Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

~~101~~	The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, filed on November 7, 2017, formatted in XBRL: (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.37



(Exact name of registrant as specified in its charter)
Delaware						32-0375147
(State or other jurisdiction of incorporation or organization)						(I.R.S. employer identification number)



Large Accelerated Filerx			☒		Accelerated Filer¨		☐

Non-Accelerated Filer¨	☐			Smaller reporting company¨		☐
~~(Do not check if a smaller reporting company)~~
		Emerging growth company¨	☐



(in millions)
Assets acquired
Identifiable intangible assets - Indefinite-lived research and development	$	3,890
Goodwill	88
Total assets acquired	$	3,978


x	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


o	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~


PART I.			FINANCIAL INFORMATION
					Page

~~PART I.~~ Item 1.			~~FINANCIAL INFORMATION~~
		~~Page~~

~~Item 1.~~	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	21
Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		2624
Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		3533
Item 4.			CONTROLS AND PROCEDURES		3634

PART II.			OTHER INFORMATION

Item 1.			LEGAL PROCEEDINGS		3735

Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		3735
Item 6.			~~EXHIBITS~~5.	37OTHER ITEMS		35
Item 6.			EXHIBITS		36



	Three months ended September 30,					Nine months ended September 30,
(in millions, except per share data)	2017		2016			2017		2016
Net revenues	$	6,995	$	6,432		$	20,477	$	18,842

Cost of products sold	1,616		1,504			4,760		4,278
Selling, general and administrative	1,452		1,381			4,324		4,202
Research and development	1,222		1,106			3,580		3,176
Acquired in-process research and development	—		80			15		160
Total operating costs and expenses	4,290		4,071			12,679		11,816
Operating earnings	2,705		2,361			7,798		7,026

Interest expense, net	252		250			752		675
Net foreign exchange loss (gain)	9		(4		)	28		313
Other expense, net	349		101			484		152
Earnings before income tax expense	2,095		2,014			6,534		5,886
Income tax expense	464		416			1,277		1,324
Net earnings	$	1,631	$	1,598		$	5,257	$	4,562

Per share data
Basic earnings per share	$	1.02	$	0.97		$	3.28	$	2.79
Diluted earnings per share	$	1.01	$	0.97		$	3.27	$	2.78
Cash dividends declared per common share	$	0.64	$	0.57		$	1.92	$	1.71

Weighted-average basic shares outstanding	1,597		1,632			1,596		1,624
Weighted-average diluted shares outstanding	1,603		1,640			1,602		1,633



(in millions)	September 30, 2017		December 31, 2016
Finished goods	$	353	$	223
Work-in-process	1,271		1,080
Raw materials	161		141
Inventories	$	1,785	$	1,444



	Three months ended September 30,				Nine months ended September 30,
(in millions, except per share information)	2017		2016		2017		2016
Basic EPS
Net earnings	$	1,631	$	1,598	$	5,257	$	4,562
Earnings allocated to participating securities	8		8		26		23
Earnings available to common shareholders	$	1,623	$	1,590	$	5,231	$	4,539
Weighted-average basic shares outstanding	1,597		1,632		1,596		1,624
Basic earnings per share	$	1.02	$	0.97	$	3.28	$	2.79

Diluted EPS
Net earnings	$	1,631	$	1,598	$	5,257	$	4,562
Earnings allocated to participating securities	8		8		26		23
Earnings available to common shareholders	$	1,623	$	1,590	$	5,231	$	4,539
Weighted-average shares of common stock outstanding	1,597		1,632		1,596		1,624
Effect of dilutive securities	6		8		6		9
Weighted-average diluted shares outstanding	1,603		1,640		1,602		1,633
Diluted earnings per share	$	1.01	$	0.97	$	3.27	$	2.78



(in millions)
Cash	$	1,883
Fair value of AbbVie common stock	3,923
Contingent consideration	620
Total consideration	$	6,426



(in millions)
Assets acquired and liabilities assumed
Accounts receivable	$	1
Prepaid expenses and other	7
Property and equipment	17
Intangible assets - Indefinite-lived research and development	6,100
Accounts payable and accrued liabilities	(31		)
Deferred income taxes	(1,933		)
Other long-term liabilities	(7		)
Total identifiable net assets	4,154
Goodwill	2,272
Total assets acquired and liabilities assumed	$	6,426



(in millions)
Cash	$	595
Deferred consideration payable	18
Contingent consideration	3,365
Total consideration	$	3,978



(in millions)
Balance as of December 31, 2016	$	15,416
Foreign currency translation adjustments	332
Balance as of September 30, 2017	$	15,748


(in millions)
Accrued balance as of December 31, 2022	$	176
Restructuring charges	24
Payments and other adjustments	(51)
Accrued balance as of June 30, 2023	$	149



(in millions)
Accrued balance as of December 31, 2016	$	87
Restructuring charges	34
Payments and other adjustments	(65		)
Accrued balance as of September 30, 2017	$	56



	Fair value – Derivatives in asset position					Fair value – Derivatives in liability position
(in millions)	Balance sheet caption	September 30, 2017		December 31, 2016		Balance sheet caption	September 30, 2017		December 31, 2016
Foreign currency forward exchange contracts
Designated as cash flow hedges	Prepaid expenses and other	$	1	$	170	Accounts payable and accrued liabilities	$	150	$	5
Designated as cash flow hedges	Other assets	—		—		Other long-term liabilities	6		—
Not designated as hedges	Prepaid expenses and other	52		55		Accounts payable and accrued liabilities	47		33
Interest rate swaps designated as fair value hedges	Other assets	—		—		Other long-term liabilities	295		338
Total derivatives		$	53	$	225		$	498	$	376



	Amortized Cost		Gross unrealized					Fair Value
(in millions)	Amortized Cost		Gains		Losses			Fair Value
Asset backed securities	$	904	$	1	$	(2	)	$	903
Corporate debt securities	1,424		4		(1		)	1,427
Other debt securities	145		—		—			145
Equity securities	18		41		(2		)	57
Total	$	2,491	$	46	$	(5	)	$	2,532



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



(in millions)	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, 2016	$	(1,435	)	$	140		$	(1,513	)	$	46		$	176		$	(2,586	)
Other comprehensive income (loss) before reclassifications	602			(307		)	(37		)	31			(229		)	60
Net losses (gains) reclassified from accumulated other comprehensive loss	—			—			58			(49		)	(96		)	(87		)
Net current-period other comprehensive income (loss)	602			(307		)	21			(18		)	(325		)	(27		)
Balance as of September 30, 2017	$	(833	)	$	(167	)	$	(1,492	)	$	28		$	(149	)	$	(2,613	)


(in millions)	Foreign currency translation adjustments		Net investment hedging activities		Pension and post-employment benefits		Cash flow hedging activities		Total
Balance as of December 31, 2022	$	(1,513)	$	464	$	(1,458)	$	308	$	(2,199)
Other comprehensive income (loss) before reclassifications	178		(168)		39		8		57
Net gains reclassified from accumulated other comprehensive loss	—		(45)		(3)		(62)		(110)
Net current-period other comprehensive income (loss)	178		(213)		36		(54)		(53)
Balance as of June 30, 2023	$	(1,335)	$	251	$	(1,422)	$	254	$	(2,252)



	Three months ended September 30,						Nine months ended September 30,
(in millions) (brackets denote gains)	2017			2016			2017			2016
Pension and post-employment benefits
Amortization of actuarial losses and other^(a)	$	28		$	22		$	81		$	64
Tax benefit	(8		)	(8		)	(23		)	(23		)
Total reclassifications, net of tax	$	20		$	14		$	58		$	41
Cash flow hedging activities
Gains on designated cash flow hedges^(b)	$	(38	)	$	(2	)	$	(101	)	$	(21	)
Tax expense (benefit)	—			(2		)	5			(2		)
Total reclassifications, net of tax	$	(38	)	$	(4	)	$	(96	)	$	(23	)