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Item 7. Management’s Discussion and Analysis

2022-02-18 compared with 2021-02-19 · 208 added, 217 removed, 295 unchanged (59% of the section changed)

6 unchanged sentences

Company Overview

AbbVie is a global, research-based biopharmaceutical company formed in 2013 following separation from Abbott Laboratories (Abbott).

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, hematologic oncology, neuroscience, aesthetics 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.

On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan).

The acquisition of Allergan creates a diversified biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions in key therapeutic areas of immunology, hematologic oncology, aesthetics, neuroscience, eye care and women's health.

AbbVie's existing product portfolio and pipeline is enhanced with numerous Allergan assets and Allergan's product portfolio benefits from AbbVie's commercial strength, expertise and international infrastructure.

See Note 5 to the Consolidated Financial Statements for additional information on the acquisition.

Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of Allergan.

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.

In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers.

Outside the United States, AbbVie sells products primarily to customers or through distributors, depending on the market served.

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The company's financial performance in 2021 included delivering worldwide net revenues of $56.2 billion, operating earnings of $17.9 billion, diluted earnings per share of $6.45 and cash flows from operations of $22.8 billion.

Worldwide net revenues increased by 38% on a reported basis and on a constant currency basis, which included $10.3 billion of contributed revenues from the Allergan acquisition, growth in the immunology portfolio from Skyrizi, Rinvoq and the continued strength of Humira in the U.S.

as well as revenue growth from Imbruvica and Venclexta.

Worldwide net revenues increased by 23% on a reported basis and 22% on a constant currency basis, reflecting growth across its immunology, hematologic oncology, neuroscience, aesthetics and eye care portfolios as well as a full period of Allergan results in 2021 compared to the prior year.

Diluted earnings per share in 2021 was $6.45 and included the following after-tax costs:

(i) $5.7 billion for the change in fair value of contingent consideration liabilities;

(ii) $4.8 billion related to the amortization of intangible assets;

(iii) $3.0 billion of Allergan acquisition and integration expenses;

(iv) $1.2 billion for acquired in-process research and development (IPR&D);

and $241 million for milestones and other research and development (R&D) expenses.

These costs were partially offset by $1.7 billion of certain tax benefits.

(i) $6.4 billion related to the amortization of intangible assets;

(ii) $2.7 billion for the change in fair value of contingent consideration liabilities;

(iii) $948 million for acquired in-process research and development (IPR&D);

(iv) $500 million as a result of a collaboration agreement extension with Calico Life Sciences LLC;

(v) $307 million for milestones and other research and development (R&D) expenses;

(vi) $253 million for charges related to litigation matters;

and (vii) $215 million of acquisition and integration expenses.

These costs were partially offset by $265 million of certain tax benefits.

Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.

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Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization.

The integration plan is expected to realize more than $2 billion of expected annual cost synergies over a three-year period, with approximately 50% realized in R&D, 40% in selling, general and administrative (SG&A) and 10% in cost of products sold.

The integration plan is expected to realize approximately $2.5 billion of annual cost synergies in 2022 .

2021 Form 10-K |

To achieve these integration objectives, AbbVie expects to incur approximately $2 billion of charges through 2022.

These costs will 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.

To achieve these integration objectives, AbbVie expects to incur total cumulative charges of approximately $2 billion through 2022.

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.

Impact of the Coronavirus Disease 2019 (COVID-19)

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic, which continues to spread throughout the United States and around the world.

In response to the growing public health crisis, AbbVie has partnered with global authorities to support the experimental use of multiple AbbVie assets to determine their efficacy in the treatment of COVID-19.

In June 2020, AbbVie announced that it entered into a collaboration with Harbour BioMed, Utrecht University and Erasmus Medical Center to develop a novel antibody therapeutic to prevent and treat COVID-19.

Additionally, AbbVie donated $35 million to increase healthcare capacity, supply critical equipment and deliver food and essential supplies during the crisis.

AbbVie continues to closely manage manufacturing and supply chain resources around the world to help ensure that patients continue to receive an uninterrupted supply of their medicines.

In response to the ongoing public health crisis posed by COVID-19, AbbVie continues to focus on ensuring the safety of employees.

Throughout the pandemic, AbbVie has followed health and safety guidance from state and local health authorities and implemented safety measures for those employees who are returning to the workplace.

AbbVie also continues to closely manage manufacturing and supply chain resources around the world to help ensure that patients continue to receive an uninterrupted supply of their medicines.

Clinical trial sites are being monitored locally to protect the safety of study participants, staff and employees.

While the impact of COVID-19 on AbbVie's operations to date has not been material, AbbVie has experienced lower new patient starts across the therapeutic portfolio.

AbbVie expects this matter could continue to negatively impact its results of operations throughout the duration of the outbreak.

The extent to which COVID-19 may impact AbbVie's financial condition and results of operations remains uncertain.

While the impact of COVID-19 on AbbVie's operations to date has not been material, AbbVie continues to experience lower new patient starts in certain products and markets.

AbbVie expects this matter could continue to negatively impact its results of operations throughout the duration of the pandemic.

The extent to which COVID-19 may impact AbbVie's financial condition and results of operations remains uncertain and is dependent on numerous evolving factors, including the measures being taken by authorities to mitigate against the spread of COVID-19, the emergence of new variants and the availability and successful administration of effective vaccines.

2022 Strategic Objectives

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AbbVie intends to continue to advance its mission in a number of ways, including:

(i) maximizing the benefits of the Allergan acquisition to create a more diversified revenue base with multiple long-term growth drivers;

(ii) growing revenues by leveraging AbbVie's commercial strength and international infrastructure across Allergan's therapeutic areas and ensuring strong commercial execution of new product launches;

(iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience, eye care and women's health as well as continued investment in key on-market products;

(i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers;

(ii) growing revenues by leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches;

(iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products;

(iv) expanding operating margins;

and (v) returning cash to shareholders via a strong and growing dividend while also reducing debt.

In addition, AbbVie anticipates several regulatory submissions and key data readouts from key clinical trials in the next 12 months.

In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.

AbbVie expects to achieve its strategic objectives through:

• Immunology revenue growth driven by increasing market share and expanding patient access of Skyrizi and Rinvoq, as well as Humira U.S.

• Immunology revenue growth driven by increasing market share and indication expansion of Skyrizi and Rinvoq, as well as Humira U.S.

sales growth.

• Hematologic oncology revenue growth from both Imbruvica and Venclexta.

• Expansion of the company’s revenue base from additional Allergan products contributing to key aesthetics and neuroscience portfolios.

• Effective management of Humira international biosimilar erosion.

• Optimization of combined AbbVie and Allergan research and development, commercial, and manufacturing operations while maintaining key growth portfolios.

• Hematologic oncology revenue growth driven by increasing market share and indication expansion of Venclexta, as well as maintaining the strong leadership position of Imbruvica.

• Aesthetics revenue growth driven by global expansion and increasing market penetration of Botox and Juvederm Collection.

• Neuroscience revenue growth driven by Vraylar, Botox Therapeutic, Ubrelvy and recently launched Qulipta.

• Sustaining eye care leadership by maximizing AbbVie's current eye care portfolio.

• The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2022.

These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7.

AbbVie remains committed to driving continued expansion of operating margins and expects to achieve this objective through continued leverage from revenue growth, realization of expense synergies from the Allergan acquisition, productivity initiatives in supply chain and ongoing efficiency programs to optimize manufacturing, commercial infrastructure, administrative costs and general corporate expenses.

The combination of AbbVie and Allergan creates a diverse entity with leadership positions across immunology, hematologic oncology, aesthetics, neuroscience, women's health, eye care and virology.

AbbVie remains committed to driving continued expansion of operating margins and expects to achieve this objective through continued realization of expense synergies from the Allergan acquisition, leverage from revenue growth, productivity initiatives in supply chain and ongoing efficiency programs to optimize manufacturing, commercial infrastructure, administrative costs and general corporate expenses.

| 2021 Form 10-K

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AbbVie's long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie's pipeline currently includes more than 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience, eye care and women's health along with targeted investments in cystic fibrosis.

AbbVie's pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care.

Of these programs, more than 50 are in mid- and late-stage development.

4 unchanged sentences

• In January 2021, AbbVie announced top-line results from its Phase 3 ADVANCE and MOTIVATE induction studies of Skyrizi in patients with Crohn’s disease met the primary and key secondary endpoints.

• In February 2020, AbbVie announced top-line results from its second Phase 3 clinical trial of Rinvoq in adult patients with active PsA.

Results from the SELECT-PsA 1 study, which evaluated Rinvoq versus placebo in patients who did not adequately respond to treatment with one or more non-biologic disease-modifying anti-rheumatic drugs (DMARDs), showed that both doses of Rinvoq met the primary and key secondary endpoints.

The safety profile was consistent with that of previous studies across indications, with no new safety risks detected.

• In May 2020, AbbVie submitted a supplemental New Drug Application (sNDA) to the U.S.

Food and Drug Administration (FDA) and, in June 2020, submitted a marketing authorization application (MAA) to the European Medicines Agency (EMA) for Rinvoq for the treatment of adult patients with active PsA.

• In June 2020, AbbVie announced top-line results from its Phase 3 Measure Up 1 study and, in July 2020, announced top-line results from its Phase 3 Measure Up 2 and AD Up studies of Rinvoq for the treatment of moderate to severe atopic dermatitis (AD) met all primary and secondary endpoints versus placebo.

• In August 2020, AbbVie submitted an sNDA to the FDA and, earlier this year, submitted an MAA to the EMA for Rinvoq for the treatment of adult patients with active ankylosing spondylitis (AS).

• In October 2020, AbbVie submitted an sNDA to the FDA and an MAA to the EMA for Rinvoq for the treatment of adult and adolescent patients with moderate to severe AD.

• In December 2020, AbbVie announced its Phase 3 U-ACHIEVE induction study of Rinvoq for the treatment of adult patients with moderate to severe ulcerative colitis met the primary and all ranked secondary endpoints.

• In January 2021, AbbVie announced that the European Commission (EC) approved Rinvoq for the treatment of adults with active PsA and active AS.

• In April 2021, AbbVie received U.S.

Food and Drug Administration (FDA) approval of Skyrizi in a single dose pre-filled syringe and pre-filled pen.

This approval will reduce the number of injections administered per treatment.

• In June 2021, AbbVie announced top-line results from its Phase 3 FORTIFY study for Skyrizi in patients with moderate to severe Crohn’s disease met the co-primary endpoints.

• In September 2021, AbbVie submitted a supplemental New Drug Application (sNDA) to the FDA for Skyrizi for the treatment of patients 16 years and older with moderate to severe Crohn’s disease.

• In November 2021, AbbVie submitted a marketing authorization application (MAA) to the European Medicines Agency (EMA) for Skyrizi for the treatment of patients 16 years or older with moderate to severe active Crohn's disease who have had inadequate response, lost response or were intolerant to conventional or biologic therapy.

• In November 2021, Ab bVie announced that the European Commission (EC) approved Skyrizi alone or in combination with methotrexate for the treatment of active PsA in adults who have had an inadequate response or who have been intolerant to one or more disease-modifying antirheumatic drugs.

• In January 2022, A bbVie announced that the FDA approved Skyrizi for the treatment of adults with active PsA.

• In January 2021, AbbVie announced that the EC approved Rinvoq for the treatment of adults with active PsA and ankylosing spondylitis (AS).

• In February 2021, AbbVie announced its Phase 3 U-ACCOMPLISH induction study of Rinvoq for the treatment of adult patients with moderate to severe ulcerative colitis (UC) met the primary and all ranked secondary endpoints.

• In June 2021, AbbVie announced the FDA will not meet the Prescription Drug User Fee Act action dates for the sNDA of Rinvoq for the treatment of adults with active AS.

No formal regulatory action has been taken on the sNDA for Rinvoq in AS.

• In June 2021, AbbVie announced the results from its Phase 3 maintenance study of Rinvoq in patients with UC met the primary and all secondary endpoints.

• In August 2021, AbbVie announced that the EC approved Rinvoq for the treatment of moderate to severe atopic dermatitis (AD) in adults and adolescents 12 years and older who are candidates for systemic therapy.

2021 Form 10-K |

• In April 2020, AbbVie received FDA approval for the use of Imbruvica in combination with rituximab for the treatment of previously untreated patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL).

• In August 2020, the EC granted marketing authorization for Imbruvica in combination with rituximab for the treatment of adult patients with previously untreated CLL.

• In February 2020, AbbVie announced that the Phase 3 VIALE-C trial of Venclexta in combination with low-dose cytarabine in newly-diagnosed patients with acute myeloid leukemia (AML) did not meet its primary endpoint.

• In March 2020, AbbVie announced that top-line results from its Phase 3 VIALE-A trial of Venclexta in combination with azacitidine in patients with AML met its primary endpoints.

• In March 2020, AbbVie received EC approval of Venclyxto in combination with obinutuzumab for patients with previously untreated CLL.

• In June 2020, AbbVie submitted an MAA to the EMA for Venclyxto for the treatment of patients with AML.

• In October 2020, AbbVie received FDA full approval of Venclexta for the treatment of patients with AML.

The approval is supported by data from a series of trials including the Phase 3 VIALE-A and VIALE-C studies.

Juvederm Collection

• In June 2020, AbbVie received FDA approval of Juvederm Voluma XC for the augmentation of the chin region to improve the chin profile in adults over the age of 21.

• In September 2021, AbbVie submitted an sNDA to the FDA and an MAA to the EMA for Rinvoq for the treatment of adults with moderately to severely active UC.

• In October 2021, A bbVie announced the results from Study 1 of the Phase 3 SELECT-AXIS 2 clinical trial for Rinvoq in patients with active AS and inadequate response to biologic disease-modifying antirheumatic drugs met the primary and all ranked secondary endpoints.

• In October 2021, A bbVie announced the results from Study 2 of the Phase 3 SELECT-AXIS 2 clinical trial for Rinvoq in adults with non-radiographic axial spondyloarthritis met the primary and 12 of 14 ranked secondary endpoints.

• In December 2021, AbbVie announced top-line results from its Phase 3 U-EXCEED induction study for Rinvoq in patients with moderate to severe Crohn's disease who had an inadequate response or were intolerant to biologic therapy met the primary and key secondary endpoints.

• In December 2021, AbbVie announced an update to the U.S.

Prescribing Information and Medication Guide for Rinvoq for the treatment of adults with moderate to severe rheumatoid arthritis (RA).

This update follows a Drug Safety Communication (DSC) issued by the FDA in September 2021 based on its final review of the post-marketing study evaluating another JAK inhibitor (tofacitinib) in patients with RA.

The DSC and this label update apply to the class of systematically administered FDA-approved JAK inhibitors for the treatment of RA and other inflammatory diseases.

Based on this class-wide update, the U.S.

label for Rinvoq will now include additional information about risks within the Boxed Warnings and Warnings Precautions sections.

The indication has also been updated to be indicated for the treatment of adults with moderately to severely active RA who have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

• In December 2021, A bbVie announced that the FDA approved Rinvoq for the treatment of adults with active PsA who have had an inadequate response or intolerance to one or more TNF blockers.

• In January 2022, Abb Vie announced its submission of an sNDA to the FDA and an MAA to the EMA for Rinvoq for the treatment of adults with active nr-axSpA with objective signs of inflammation who have responded inadequately to nonsteroidal anti-inflammatory drugs.

• In January 2022, Ab bVie announced that the FDA approved Rinvoq for the treatment of moderate to severe AD in adults and children 12 years of age and older whose disease did not respond to previous treatment and is not well controlled with other pills or injections, including biologic medicines, or when use of other pills or injections is not recommended.

• In February 2022, AbbVie was notified that the EC is requesting the EMA to assess safety concerns associated with JAK inhibitor products authorized in inflammatory diseases and to evaluate the impact of these events on their benefit-risk balance.

The assessment covers all JAK inhibitors approved for use in inflammatory diseases.

The request is for an opinion from the EMA by September 30, 2022.

• In June 2021, AbbVie announced results from its Phase 3 GLOW study comparing the efficacy and safety of Imbruvica in combination with Venclexta versus chlorambucil plus obinutuzumab for first-line treatment in patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma met its primary endpoint.

• In May 2021, AbbVie received European Commission approval for Venclyxto in combination with a hypomethylating agent for patients with newly diagnosed acute myeloid leukemia (AML) who are ineligible for intensive chemotherapy.

| 2021 Form 10-K

• In July 2021, AbbVie announced that the FDA granted Breakthrough Therapy Designation to Venclexta in combination with azacitidine for the potential treatment of adult patients with previously untreated intermediate-, high- and very high-risk myelodysplastic syndromes.

• In January 2022, AbbVie announced that the FDA granted Breakthrough Therapy Designation to investigational telisotuzumab vedotin (Teliso-V) for the treatment of patients with advanced/metastatic epidermal growth factor receptor wild type, nonsquamous non-small cell lung cancer with high levels of c-Met overexpression whose disease has progressed on or after platinum-based therapy.

Botox Therapeutic

• In June 2020, the FDA accepted the company's supplemental Biologics License Application (sBLA) to expand the Botox prescribing information for the treatment of detrusor (bladder muscle) overactivity associated with an underlying neurologic condition in certain pediatric patients.

• In February 2021, AbbVie received FDA approval of Botox for the treatment of detrusor overactivity associated with a neurological condition in certain pediatric patients 5 years of age and older.

• In July 2020, AbbVie received FDA approval of Botox for the treatment of lower limb spasticity caused by cerebral palsy in pediatric patients over the age of 2.

• In July 2020, AbbVie announced that the Phase 3 ADVANCE trial evaluating atogepant, an orally administered calcitonin gene-related peptide receptor antagonist, for migraine prevention met its primary endpoint for all doses (10mg, 30mg, and 60mg) compared to placebo, all secondary endpoints with 30mg and 60mg doses, and four out of six secondary endpoints with the 10mg dose.

• In January 2021, AbbVie submitted a New Drug Application to the FDA for atogepant for the prevention of episodic migraine.

• In September 2020, AbbVie announced that the FDA granted Orphan Drug and Fast Track designations for elezanumab, an investigational treatment for patients following spinal cord injury.

• In September 2021, AbbVie announced that the FDA approved Qulipta (atogepant) for the preventive treatment of episodic migraine in adults.

• In October 2021, A bbVie announced top-line results from two Phase 3 clinical trials, Study 3111-301-001 and Study 3111-302-001, evaluating the efficacy and safety of cariprazine (Vraylar) as an adjunctive treatment for patients with major depressive disorder (MDD).

In Study 3111-301-001, Vraylar met its primary endpoint demonstrating statistically significant change from baseline to week six in the Montgomery-Åsberg Depression Rating Scale (MADRS) total score compared with placebo in patients with MDD.

In Study 3111-302-001, Vraylar demonstrated numerical improvement in depressive symptoms from baseline to week six in MADRS total score compared with placebo but did not achieve statistical significance.

Safety data were consistent with the established safety profile of Vraylar across indications with no new safety signals identified.

• In October 2021, Abb Vie announced that results from its pivotal Phase 3 M15-736 study of ABBV-951 (foslevodopa/foscarbidopa) in patients with advanced Parkinson’s disease met its primary endpoint in a 12-week study.

• In October 2021, AbbVie announced that the FDA approved Vuity (pilocarpine HCl ophthalmic solution) for the treatment of presbyopia.

2021 Form 10-K |

Virology/Liver Disease

• In March 2020, AbbVie announced that the EC granted marketing authorization for Maviret to shorten once-daily treatment duration from 12 to 8 weeks in treatment-naïve, compensated cirrhotic, chronic hepatitis C virus (HCV) patients with genotype 3 infection.

• In October 2020, AbbVie announced that top-line results from its Phase 3 GEMINI 1 and 2 studies of AGN-190584, an investigational ophthalmic solution, for the treatment of presbyopia met their primary endpoint and majority of the secondary endpoints.

Abicipar pegol

• In June 2020, AbbVie announced that the FDA issued a Complete Response Letter (CRL) to the Biologics License Application (BLA) for abicipar pegol, a novel, investigational DARPin therapy for patients with neovascular (wet) age-related macular degeneration (nAMD).

The CRL indicated that the rate of intraocular inflammation observed following administration of abicipar pegol results in an unfavorable benefit-risk ratio in the treatment of nAMD.

In July 2020, AbbVie withdrew the regulatory application with the EMA for abicipar pegol for the treatment of nAMD.

Women's Health

• In May 2020, the FDA approved Oriahnn (elagolix, estradiol, and norethindrone acetate capsules;

elagolix capsules) for the management of heavy menstrual bleeding due to uterine fibroids in pre-menopausal women.

RESULTS OF OPERATIONS

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Total $ 20,694 $ 19,832 $ 19,169 4.3 % 3.5 % 3.7 % 3.7 %

Skyrizi United States $ 1,385 $ 311 $ — >100.0% n/m >100.0% n/m

International 205 44 — >100.0% n/m >100.0% n/m

Total $ 1,590 $ 355 $ — >100.0% n/m >100.0% n/m

Rinvoq United States $ 653 $ 47 $ — >100.0% n/m >100.0% n/m

International 78 — — >100.0% n/m >100.0% n/m

Total $ 731 $ 47 $ — >100.0% n/m >100.0% n/m

Skyrizi United States $ 2,486 $ 1,385 $ 311 79.6 % >100.0% 79.6 % >100.0%

International 453 205 44 >100.0 % >100.0% >100.0 % >100.0%

Total $ 2,939 $ 1,590 $ 355 84.9 % >100.0% 84.0 % >100.0%

Rinvoq United States $ 1,271 $ 653 $ 47 94.8 % >100.0% 94.8 % >100.0%

International 380 78 — >100.0 % >100.0% >100.0 % >100.0%

Total $ 1,651 $ 731 $ 47 >100.0 % >100.0% >100.0 % >100.0%

Hematologic Oncology

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Botox Cosmetic (a)

United States $ 687 $ — $ — n/m n/m n/m n/m

International 425 — — n/m n/m n/m n/m

Total $ 1,112 $ — $ — n/m n/m n/m n/m

United States $ 1,424 $ 687 $ — >100.0 % n/m >100.0 % n/m

International 808 425 — 90.0 % n/m 83.9 % n/m

Total $ 2,232 $ 1,112 $ — >100.0 % n/m 98.4 % n/m

Juvederm Collection (a)

United States $ 318 $ — $ — n/m n/m n/m n/m

International 400 — — n/m n/m n/m n/m

Total $ 718 $ — $ — n/m n/m n/m n/m

United States $ 658 $ 318 $ — >100.0 % n/m >100.0 % n/m

International 877 400 — >100.0 % n/m >100.0 % n/m

Total $ 1,535 $ 718 $ — >100.0 % n/m >100.0 % n/m

Other Aesthetics (a)

United States $ 666 $ — $ — n/m n/m n/m n/m

International 94 — — n/m n/m n/m n/m

Total $ 760 $ — $ — n/m n/m n/m n/m

United States $ 1,268 $ 666 $ — 90.2 % n/m 90.2 % n/m

International 198 94 — >100.0 % n/m >100.0 % n/m

Total $ 1,466 $ 760 $ — 93.0 % n/m 91.9 % n/m

Botox Therapeutic (a)

United States $ 1,155 $ — $ — n/m n/m n/m n/m

International 232 — — n/m n/m n/m n/m

Total $ 1,387 $ — $ — n/m n/m n/m n/m

United States $ 951 $ — $ — n/m n/m n/m n/m

United States $ 2,012 $ 1,155 $ — 74.3 % n/m 74.3 % n/m

International 439 232 — 89.0 % n/m 78.8 % n/m

Total $ 2,451 $ 1,387 $ — 76.7 % n/m 75.0 % n/m

United States $ 1,728 $ 951 $ — 81.7 % n/m 81.7 % n/m

Duodopa United States $ 102 $ 103 $ 97 (1.0) % 5.9 % (1.0) % 5.9 %

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Total $ 511 $ 494 $ 461 3.4 % 7.1 % (0.3) % 6.2 %

United States $ 125 $ — $ — n/m n/m n/m n/m

United States $ 552 $ 125 $ — >100.0 % n/m >100.0 % n/m

Other Neuroscience (a)

United States $ 528 $ — $ — n/m n/m n/m n/m

International 11 — — n/m n/m n/m n/m

Total $ 539 $ — $ — n/m n/m n/m n/m

United States $ 667 $ 528 $ — 26.3 % n/m 26.3 % n/m

International 18 11 — 77.4 % n/m 64.7 % n/m

Total $ 685 $ 539 $ — 27.2 % n/m 27.0 % n/m

2021 Form 10-K |

3 unchanged sentences

Lumigan/Ganfort (a)

United States $ 165 $ — $ — n/m n/m n/m n/m

International 213 — — n/m n/m n/m n/m

Total $ 378 $ — $ — n/m n/m n/m n/m

United States $ 273 $ 165 $ — 64.7 % n/m 64.7 % n/m

International 306 213 — 44.1 % n/m 38.1 % n/m

Total $ 579 $ 378 $ — 53.1 % n/m 49.7 % n/m

Alphagan/Combigan (a)

United States $ 223 $ — $ — n/m n/m n/m n/m

International 103 — — n/m n/m n/m n/m

Total $ 326 $ — $ — n/m n/m n/m n/m

United States $ 755 $ — $ — n/m n/m n/m n/m

International 32 — — n/m n/m n/m n/m

Total $ 787 $ — $ — n/m n/m n/m n/m

United States $ 373 $ 223 $ — 66.5 % n/m 66.5 % n/m

International 156 103 — 52.5 % n/m 50.6 % n/m

Total $ 529 $ 326 $ — 62.1 % n/m 61.5 % n/m

United States $ 1,234 $ 755 $ — 63.3 % n/m 63.3 % n/m

International 56 32 — 75.3 % n/m 80.1 % n/m

Total $ 1,290 $ 787 $ — 63.8 % n/m 64.0 % n/m

Other Eye Care (a)

United States $ 305 $ — $ — n/m n/m n/m n/m

International 388 — — n/m n/m n/m n/m

Total $ 693 $ — $ — n/m n/m n/m n/m

United States $ 523 $ 305 $ — 72.7 % n/m 72.7 % n/m

International 646 388 — 66.1 % n/m 61.0 % n/m

Total $ 1,169 $ 693 $ — 69.0 % n/m 66.1 % n/m

Women's Health

Lo Loestrin (a)

United States $ 346 $ — $ — n/m n/m n/m n/m

International 10 — — n/m n/m n/m n/m

Total $ 356 $ — $ — n/m n/m n/m n/m

Orilissa/Oriahnn United States $ 121 $ 91 $ 11 33.3 % >100.0% 33.3 % >100.0%

United States $ 423 $ 346 $ — 21.9 % n/m 21.9 % n/m

International 14 10 — 43.3 % n/m 33.0 % n/m

Total $ 437 $ 356 $ — 22.5 % n/m 22.2 % n/m

Orilissa/Oriahnn United States $ 139 $ 121 $ 91 15.4 % 33.3 % 15.4 % 33.3 %

International 6 4 2 57.7 % 96.1 % 47.6 % 97.7 %

Total $ 145 $ 125 $ 93 16.7 % 34.6 % 16.4 % 34.6 %

Other Women's Health (a)

United States $ 181 $ — $ — n/m n/m n/m n/m

International 11 — — n/m n/m n/m n/m

Total $ 192 $ — $ — n/m n/m n/m n/m

United States $ 209 $ 181 $ — 16.2 % n/m 16.2 % n/m

International 5 11 — (57.5) % n/m (61.5) % n/m

Total $ 214 $ 192 $ — 11.7 % n/m 11.5 % n/m

Other Key Products

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Linzess/Constella (a)

United States $ 649 $ — $ — n/m n/m n/m n/m

International 18 — — n/m n/m n/m n/m

Total $ 667 $ — $ — n/m n/m n/m n/m

United States $ 1,006 $ 649 $ — 55.1 % n/m 55.1 % n/m

International 32 18 — 77.3 % n/m 66.4 % n/m

Total $ 1,038 $ 667 $ — 55.7 % n/m 55.4 % n/m

Synthroid United States $ 767 $ 771 $ 786 (0.6) % (1.9) % (0.6) % (1.9) %

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n/m – Not meaningful

(a) Net revenues include Allergan product revenues from the date of the acquisition, May 8, 2020, through December 31, 2020.

(a) Net revenues include Allergan product revenues after the acquisition closing date of May 8, 2020.

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

Global Humira sales increased 4% in 2020 primarily driven by market growth across therapeutic categories, offset by direct biosimilar competition in certain international markets.

In the United States, Humira sales increased 8% in 2020 driven by market growth across all indications and favorable pricing, partially offset by lower new patient starts due to the COVID-19 pandemic.

Global Humira sales increased 4% in 2021 primarily driven by market growth across therapeutic categories, partially offset by direct biosimilar competition in certain international markets.

In the United States, Humira sales increased 8% in 2021 driven by market growth across all indications.

This increase was partially offset by slightly lower market share following corresponding market share gains of Skyrizi and Rinvoq.

Internationally, Humira revenues decreased 13% in 2021 primarily driven by direct biosimilar competition in certain international markets.

Biosimilar competition for Humira is not expected in the United States until 2023.

AbbVie continues to pursue strategies intended to maintain market leadership among its installed patient base and add to the sustainability of Humira.

Net revenues for Skyrizi increased more than 100% in 2020 primarily driven by market growth and market share gains over the prior year following the April 2019 regulatory approvals for the treatment of moderate to severe plaque psoriasis.

Net revenues for Rinvoq increased more than 100% in 2020 primarily driven by the August 2019 FDA approval and December 2019 EC approval for the treatment of moderate to severe rheumatoid arthritis.

Net revenues for Skyrizi increased 84% in 2021 primarily driven by continued strong volume and market share uptake since launch in 2019 as a treatment for plaque psoriasis as well as market growth over the prior year.

Net revenues for Rinvoq increased by more than 100% in 2021 primarily driven by continued strong volume and market share uptake since launch in 2019 for the treatment of moderate to severe rheumatoid arthritis as well as market growth over the prior year.

Net revenues were also favorably impacted by recent regulatory approvals and expansion of Rinvoq for the treatment of psoriatic arthritis, atopic dermatitis and ankylosing spondylitis in certain international markets.

| 2021 Form 10-K

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 profit.

AbbVie's global Imbruvica revenues increased 14% in 2020 as a result of continued penetration of Imbruvica for patients with CLL, partially offset by lower new patient starts due to the COVID-19 pandemic in 2020.

AbbVie's global Imbruvica revenues increased 2% in 2021 as a result of modest favorable pricing in the United States and increased collaboration revenues, partially offset by lower new patient starts due to the COVID-19 pandemic and share loss in the United States.

Net revenues for Venclexta increased 34% in 2021 primarily due to continued expansion of Venclexta for the treatment of patients with first-line CLL, relapsed/refractory CLL and first-line AML.

Net revenues for Botox Cosmetic used in facial aesthetics were $1.1 billion in 2020 for the period subsequent to the completion of the Allergan acquisition.

Net revenues for Juvederm Collection (including Juvederm Ultra XC, Juvederm Voluma XC and other Juvederm products) used in facial aesthetics were $718 million in 2020 for the period subsequent to the completion of the Allergan acquisition.

Net revenues for Botox Therapeutic used primarily in neuroscience and urology therapeutic areas were $1.4 billion in 2020 for the period subsequent to the completion of the Allergan acquisition.

Net revenues for Vraylar for the treatment of schizophrenia, bipolar I disorder and bipolar depression were $951 million in 2020 for the period subsequent to the completion of the Allergan acquisition.

Global Mavyret sales decreased 37% in 2020 primarily driven by lower global new patient starts due to the COVID-19 pandemic as well as competitive dynamics in the U.S.

Net revenues for Creon increased 7% in 2020 primarily driven by continued market growth, partially offset by lower new patient starts due to the COVID-19 pandemic.

Creon maintains market leadership in the pancreatic enzyme market with approximately 80% total market share.

Net revenues for Lupron decreased 14% in 2020 primarily due to a near-term supply issue which has impacted product availability of certain formulations.

Net revenues for Botox Cosmetic used in facial aesthetics increased 98% in 2021 due to increased brand investment and strong recovery from the COVID-19 pandemic.

Net revenues were also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.

Net revenues for Juvederm Collection (including Juvederm Ultra XC, Juvederm Voluma XC and other Juvederm products) used in facial aesthetics increased by more than 100% in 2021 due to increased brand investment and strong recovery from the COVID-19 pandemic.

Net revenues were also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.

Net revenues for Botox Therapeutic used primarily in neuroscience and urology therapeutic areas increased 75% in 2021 due to a strong recovery from the COVID-19 pandemic.

Net revenues were also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.

Net revenues for Vraylar for the treatment of schizophrenia, bipolar I disorder and bipolar depression increased 82% in 2021 due to higher market share and market growth.

Net revenues were also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.

Net revenues for Ubrelvy for the acute treatment of migraine with or without aura in adults increased by more than 100% in 2021 primarily due to increased volume and market share uptake since launch in 2020.

Net revenues for Mavyret decreased 8% in 2021 primarily driven by the continued disruption of global HCV markets due to the COVID-19 pandemic.

Percent change

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as a percent of net revenues 69 % 66 % 78 %

Gross margin as a percentage of net revenues in 2020 decreased from 2019 primarily due to the unfavorable impacts of higher amortization of intangible assets and inventory fair value step-up adjustments associated with the Allergan acquisition as well as collaboration profit sharing arrangements for Imbruvica and Venclexta.

Gross margin as a percentage of net revenues in 2021 increased from 2020 primarily due to lower amortization of inventory fair value step-up adjustment associated with the Allergan acquisition and favorable changes in product mix, partially offset by higher amortization of intangible assets associated with the Allergan acquisition.

Selling, General and Administrative

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as a percent of net revenues 22 % 25 % 21 %

Selling, general and administrative (SG&A) expenses as a percentage of net revenues in 2020 increased from 2019 primarily due to the unfavorable impacts of incremental SG&A expenses of Allergan, including transaction and integration costs resulting from the acquisition.

SG&A expenses as a percentage of net revenues in 2021 decreased primarily due to lower transaction and integration costs related to the acquisition of Allergan as well as leverage from revenue growth and synergies realized in the period subsequent to completion of the Allergan acquisition.

2021 Form 10-K |

Research and Development and Acquired In-Process Research and Development

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Acquired in-process research and development $ 962 $ 1,198 $ 385 (20) % >100%

Research and Development (R&D) expenses as a percentage of net revenues decreased in 2020 primarily due to the $1.0 billion intangible asset impairment charge in 2019, which represented the remaining value of the IPR&D acquired as part

| 2020 Form 10-K

of the 2016 Stemcentrx acquisition following the decision to terminate the Rova-T R&D program.

See Note 7 to the Consolidated Financial Statements for additional information regarding the impairment charge.

R&D expenses as a percentage of net revenues in 2020 were also favorably impacted by increased scale of the combined company for the period subsequent to the completion of the Allergan acquisition.

Acquired IPR&D expenses reflect upfront payments related to various collaborations.

Acquired IPR&D expense in 2020 included a charge of $750 million as a result of entering a collaboration agreement with Genmab A/S (Genmab) to research, develop and commercialize investigational bispecific antibody therapeutics for the treatment of cancer.

Acquired IPR&D expense in 2020 also included a charge of $200 million as a result of a collaboration agreement with I-Mab Biopharma (I-Mab) for the development and commercialization of lemzoparlimab for the treatment of multiple cancers.

See Note 5 to the Consolidated Financial Statements for additional information regarding the Genmab and I-Mab agreements.

There were no individually significant transactions or cash flows during 2019.

Other Operating Expenses and Income

Other operating income in 2019 included $550 million of income from a legal settlement related to an intellectual property dispute with a third party and $330 million of income related to an amended and restated license agreement between AbbVie and Reata.

See Note 5 to the Consolidated Financial Statements for additional information on the Reata agreement.

R&D expenses as a percentage of net revenues decreased in 2021 primarily due to the increased scale of the combined company and synergies realized for the period subsequent to completion of the Allergan acquisition as well as lower integration costs related to the acquisition of Allergan.

Acquired IPR&D expenses represent initial costs to acquire rights to in-process R&D projects through R&D collaborations, licensing arrangements or other asset acquisitions.

Acquired IPR&D expense in 2021 included a charge of $400 million as a result of exercising the company's exclusive right to acquire TeneoOne, an affiliate of Teneobio, Inc., and TNB-383B, a BCMA-targeting immunotherapeutic for the potential treatment of relapsed or refractory multiple myeloma and a charge of $370 million as a result of entering into a collaboration agreement with REGENXBIO Inc.

for the development and commercialization of RGX-314, an investigational gene therapy for wet age-related macular degeneration, diabetic retinopathy and other chronic retinal diseases.

Acquired IPR&D expense in 2020 included a charge of $750 million as a result of entering into a collaboration agreement with Genmab A/S to research, develop and commercialize investigational bispecific antibody therapeutics for the treatment of cancer.

Acquired IPR&D expense in 2020 also included a charge of $200 million as a result of entering into a collaboration agreement with I-Mab Biopharma for the development and commercialization of lemzoparlimab for the treatment of multiple cancers.

See Note 5 to the Consolidated Financial Statements for additional information.

Other Operating Expense (Income), Net

Other operating expense in 2021 included a $500 million charge related to the extension of the Calico collaboration to discover, develop and bring to market new therapies for patients with age-related diseases, including neurodegeneration and cancer.

Other Non-Operating Expenses

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Other expense, net 2,500 5,614 3,006

Interest expense in 2020 increased compared to 2019 primarily due to a higher average debt balance associated with the financing of the Allergan acquisition as well as the incremental Allergan debt acquired, partially offset by the favorable impact of lower interest rates on the company’s debt obligations.

Interest expense in 2021 decreased compared to 2020 primarily due to the favorable impact of lower interest rates on the company’s floating rate debt obligations and deleveraging, partially offset by a higher average debt balance associated with the incremental Allergan debt acquired.

Interest income in 2021 decreased compared to 2020 primarily due to a lower average cash and cash equivalents balance as a result of the cash paid for the Allergan acquisition and the unfavorable impact of lower interest rates.

Other expense, net included charges related to the change in fair value of the contingent consideration liabilities of $5.8 billion in 2020 and $3.1 billion in 2019.

Other expense, net included charges related to changes in fair value of the contingent consideration liabilities of $2.7 billion in 2021 and $5.8 billion in 2020.

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.

In 2020, the change in fair value primarily included the increase in the Skyrizi contingent consideration liability due to higher estimated future sales driven by stronger market share uptake and favorable clinical trial results as well as lower interest rates.

In 2019, the Skyrizi contingent consideration liability increased due to higher probabilities of success, higher estimated future sales, declining interest rates and passage of time.

The higher probabilities of success primarily resulted from the April 2019 regulatory approvals of Skyrizi for the treatment of moderate to severe plaque psoriasis.

These changes were partially offset by a $91 million decrease in the Stemcentrx contingent consideration liability due to the termination of the Rova-T R&D program.

Income Tax Expense

The effective income tax rate was negative 36% in 2020, 6% in 2019 and negative 9% in 2018.

The effective tax rate in each period differed from the statutory tax rate principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities, changes in enacted tax rates and laws and related restructuring, the cost of repatriation decisions, tax audit settlements and Boehringer Ingelheim accretion on contingent consideration.

The decrease in the effective tax rate for 2020 over the prior year was principally due to the recognition of a net tax benefit of $1.7 billion related to changes in tax laws and related restructuring, including certain intra-group transfers of intellectual property and deferred tax remeasurement.

In 2021, the change in fair value included the increase in the Skyrizi contingent consideration liability due to higher estimated sales driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially offset by higher discount rates.

In 2020, the change in fair value primarily included the increase in the Skyrizi contingent consideration liability due to higher estimated sales driven by stronger market share uptake, lower discount rates, the passage of time and favorable clinical trial results.

| 2021 Form 10-K

Income Tax Expense

The effective income tax rate was 11% in 2021, negative 36% in 2020 and 6% in 2019.

The effective income tax rates differed from the statutory tax rate principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities, changes in enacted tax rates and laws and related restructuring, tax audit settlements and accretion on contingent consideration.

The 2020 effective income tax rate included the recognition of a net tax benefit of $1.7 billion related to changes in tax laws and related restructuring, including certain intra-group transfers of intellectual property and deferred tax remeasurement.

The effective tax rates for these periods also reflected the benefit from U.S.

tax credits principally related to research and development credits, the orphan drug tax credit and Puerto Rico excise tax credits.

The Puerto Rico excise tax credits relate to legislation enacted by Puerto Rico that assesses an excise tax on certain products manufactured in Puerto Rico.

The tax is levied on gross inventory purchases from entities in Puerto Rico and is included in cost of products sold in the consolidated statements of earnings.

The majority of the tax is creditable for U.S.

income tax purposes.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

years ended December 31 (in millions) 2021 2020 2019

Cash flows from:

Cash flows provided by (used in)

Operating activities $ 22,777 $ 17,588 $ 13,324

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Financing activities (19,039) (11,501) 18,708

Operating cash flows in 2020 increased from 2019 and included the results of Allergan subsequent to the May 8 acquisition date.

Operating cash flows in 2020 were favorably impacted by higher net revenues of the combined company and the timing of working capital cash flows, partially offset by acquisition-related cash expenses.

Operating cash flows in 2021 increased from 2020.

Operating cash flows in 2021 were favorably impacted by higher net revenues of the combined company and lower acquisition-related cash expenses, partially offset by higher income tax payments and the timing of working capital cash flows.

Operating cash flows also reflected AbbVie’s contributions to its defined benefit plans of $376 million in 2021 and $367 million in 2020.

Investing cash flows in 2020 primarily included $39.7 billion cash consideration paid to acquire Allergan offset by cash acquired of $1.5 billion.

Investing cash flows also included net sales and maturities of investments totaling $1.5 billion, payments made for other acquisitions and investments of $1.4 billion and capital expenditures of $798 million.

Investing cash flows in 2019 included net sales and maturities of investment securities totaling $2.1 billion resulting from the sale of substantially all of the company's investments in debt securities, payments made for other acquisitions and investments of $1.1 billion and capital expenditures of $552 million.

Investing cash flows in 2021 included $535 million cash consideration paid to acquire Soliton, Inc.

offset by cash acquired, payments made for other acquisitions and investments of $1.4 billion, capital expenditures of $787 million and net purchases of investment securities totaling $21 million.

Investing cash flows in 2020 included $39.7 billion cash consideration paid to acquire Allergan offset by cash acquired of $1.5 billion, net sales and maturities of investment securities totaling $1.5 billion, payments made for other acquisitions and investments of $1.4 billion and capital expenditures of $798 million.

Financing cash flows in 2021 included early repayments of $1.8 billion aggregate principal amount of the company's 2.3% principal notes, $1.2 billion aggregate principal amount of the company's 5.0% senior notes and €750 million aggregate principal amount of the company's 0.5% senior Euro notes.

Financing cash flows also included the May 2021 repayment of $750 million aggregate principal amount of floating rate senior notes and the November 2021 repayment of $1.3 billion aggregate principal amount of 3.375% senior notes, $1.8 billion aggregate principal amount of 2.15% senior notes and $750 million aggregate principal amount of floating rate senior notes at maturity.

Additionally, financing cash flows included repayment of a $1.0 billion floating rate term loan due May 2023 and issuance of a new $1.0 billion floating rate term loan as part of the term loan refinancing in September 2021.

Financing cash flows in 2020 included the issuance of term loans totaling $3.0 billion under the existing $6.0 billion term loan credit agreement which were used to finance the acquisition of Allergan.

Subsequent to these borrowings, AbbVie terminated the unused commitments of the lenders under the term loan.

Additionally, financing cash flows included the May 2020 repayment of $3.8 billion aggregate principal amount of the company's 2.50% senior notes at maturity, the September 2020 repayment of $650 million aggregate principal amount of 3.375% Allergan exchange notes at maturity, and the November 2020 repayments of €700 million aggregate principal amount of floating rate Allergan exchange notes at maturity and $450 million aggregate principal amount of 4.875% Allergan exchange notes due February 2021.

Financing cash flows in 2019 included the issuance of $30.0 billion aggregate principal amount of floating rate and fixed rate unsecured senior notes which were used to finance the acquisition of Allergan.

Additionally, financing cash flows in 2019 included the issuance of €1.4 billion aggregate principal amount of unsecured senior Euro notes which the company used to redeem €1.4 billion aggregate principal amount of 0.38% senior Euro notes that were due to mature in November 2019, as well as the repayment of a $3.0 billion 364-day term loan credit agreement that was scheduled to mature in June 2019.

Cash dividend payments totaled $7.7 billion in 2020 and $6.4 billion in 2019.

The increase in cash dividend payments was primarily driven by higher outstanding shares following the 286 million shares of AbbVie common stock issued to Allergan shareholders in May 2020 as well as an increase in the dividend rate.

On October 30, 2020, AbbVie announced that its board of directors declared an increase in the quarterly cash dividend from $1.18 per share to $1.30 per share beginning with the dividend payable on February 16, 2021 to stockholders of record as of January 15, 2021.

This reflects an increase of approximately 10.2% over the previous quarterly rate.

The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

Additionally, financing cash flows included the May 2020 repayment of $3.8 billion aggregate principal amount of the company's 2.50% senior notes, the September 2020 repayment of $650 million aggregate principal amount of 3.375% senior notes and the November 2020 repayments of €700 million aggregate principal amount of floating rate senior Euro notes at maturity as well as the $450 million aggregate principal amount of 4.875% senior notes due February 2021.

Financing cash flows also included cash dividend payments of $9.3 billion in 2021 and $7.7 billion in 2020.

The increase in cash dividend payments was primarily driven by an increase of the dividend rate and higher outstanding shares following the 286 million shares of AbbVie common stock issued to Allergan shareholders in May 2020.

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management’s discretion.

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Under this authorization, AbbVie repurchased 6 million shares for $670 million in 2021 and 8 million shares for $757 million in 2020.

AbbVie cash-settled $201 million of its December 2018 open market purchases in January 2019.

AbbVie's remaining stock repurchase authorization was $2.5 billion as of December 31, 2021.

In 2020 and 2019, the company issued and redeemed commercial paper.

2021 Form 10-K |

No commercial paper borrowings were issued during 2021.

In 2020, the company issued and redeemed commercial paper.

There were no commercial paper borrowings outstanding as of December 31, 2021 or December 31, 2020.

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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

| 2020 Form 10-K

allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable.

AbbVie establishes an allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts 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.

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Credit Ratings

Following the acquisition of Allergan, S&P Global Ratings revised its ratings outlook to stable from negative and lowered the issuer credit rating by one notch to BBB+ from A- and the short-term rating to A-2 from A-1.

There were no changes to the company's credit ratings during 2021.

Following the acquisition of Allergan in 2020, S&P Global Ratings revised its ratings outlook to stable from negative and lowered the issuer credit rating by one notch to BBB+ from A- and the short-term rating to A-2 from A-1.

There were no changes in Moody's Investor Service of its Baa2 senior unsecured long-term rating and Prime-2 short-term rating with a stable outlook.

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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.

Future Cash Requirements

Contractual Obligations

The following table summarizes AbbVie's estimated contractual obligations as of December 31, 2020:

(in millions) Total Less than

one year One to

three years Three to

five years More than

Short-term borrowings $ 34 $ 34 $ — $ — $ —

The following table summarizes AbbVie's estimated material contractual obligations as of December 31, 2021:

(in millions) Total Current Long-term

Long-term debt, including current portion $ 75,962 $ 12,428 $ 63,534

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30,002 2,392 27,610

Non-cancelable operating and finance lease payments 1,154 229 323 208 394

Purchase obligations and other (b)

5,432 5,040 249 112 31

Other long-term liabilities (c) (d) (e)

Contingent consideration liabilities (b)

14,887 1,249 13,638

Total $ 143,710 $ 17,506 $ 24,903 $ 24,559 $ 76,742

(a) Includes estimated future interest payments on long-term debt.

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See Note 10 to the Consolidated Financial Statements for additional information regarding the company's debt instruments and Note 11 for additional information on the interest rate swap agreements outstanding at December 31, 2021.

(b) Includes the company's significant unconditional purchase obligations.

These commitments do not exceed the company's projected requirements and are made in the normal course of business.

(c) Excludes liabilities associated with the company's unrecognized tax benefits as it is not possible to reliably estimate the timing of the future cash outflows related to these liabilities.

See Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.

| 2021 Form 10-K

(d) Includes $13.0 billion of contingent consideration liabilities which are recorded at fair value on the consolidated balance sheet.

(b) Includes contingent consideration liabilities which are recorded at fair value on the consolidated balance sheet.

Potential contingent consideration payments that exceed the fair value recorded on the consolidated balance sheet are not included in the table of contractual obligations.

See Note 11 to the Consolidated Financial Statements for additional information regarding these liabilities.

(e) Includes a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S.

AbbVie enters into certain unconditional purchase obligations and other commitments in the normal course of business.

There have been no changes to these commitments that would have a material impact on the company’s ability to meet either short-term or long-term future cash requirements.

Future income tax cash requirements include a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S.

tax reform enacted in 2017.

The one-time transition tax is generally payable in eight annual installments.

AbbVie enters into R&D collaboration arrangements with third parties that may require future milestone payments to third parties contingent upon the achievement of certain development, regulatory, or commercial milestones.

The one-time transition tax liability was $3.9 billion as of December 31, 2021 and is payable in five future annual installments.

Liabilities for unrecognized tax benefits totaled $6.0 billion as of December 31, 2021.

It is not possible to reliably estimate the timing of the future cash outflows related to these liabilities.

See Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.

Quarterly Cash Dividend

On October 29, 2021, AbbVie announced that its board of directors declared an increase in the quarterly cash dividend from $1.30 per share to $1.41 per share beginning with the dividend payable on February 15, 2022 to stockholders of record as of January 14, 2022.

This reflects an increase of approximately 8.5% over the previous quarterly rate.

Collaborations, Licensing and Other Arrangements

AbbVie enters into collaborative, licensing, and other arrangements with third parties that may require future milestone payments to third parties contingent upon the achievement of certain development, regulatory, or commercial milestones.

Individually, these arrangements are insignificant in any one annual reporting period.

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It is not possible to predict with reasonable certainty whether these milestones will be achieved or the timing for achievement.

As a result, these potential payments are not included in the table of contractual obligations.

See Note 5 to the Consolidated Financial Statements for additional information on these collaboration arrangements.

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For the majority of sales, the company transfers control, invoices the customer and recognizes revenue upon shipment to the customer.

2021 Form 10-K |

AbbVie provides rebates to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations and other government agencies and private entities.

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Historically, adjustments to rebate accruals have not been material to net earnings.

| 2020 Form 10-K

The following table is an analysis of the three largest rebate accruals and chargeback allowances, which comprise approximately 89% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2020.

The following table is an analysis of the three largest accruals for rebates and chargebacks, which comprise approximately 95% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2021.

Remaining rebate provisions charged against gross revenues are not significant in the determination of operating earnings.

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Balance at December 31, 2019 1,765 1,936 686

Additions (a)

Provisions 6,715 8,656 8,677

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Balance at December 31, 2020 2,945 2,907 741

Additions (a)

Provisions 9,622 11,306 11,286

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The significant assumptions, which are reviewed annually, include the discount rate, the expected long-term rate of return on plan assets and the health care cost trend rates, and are disclosed in Note 12 to the Consolidated Financial Statements.

| 2021 Form 10-K

The discount rate is selected based on current market rates on high-quality, fixed-income investments at December 31 each year.

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Projected benefit obligation (61) 69

2020 Form 10-K |

The expected long-term rate of return is based on the asset allocation, historical performance and the current view of expected future returns.

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AbbVie has acquired and may continue to acquire significant intangible assets in connection with business combinations that AbbVie records at fair value.

Transactions involving the purchase or sale of intangible assets occur with some frequency between companies in the pharmaceuticals industry and valuations are usually based on a discounted cash flow analysis incorporating the stage of completion.

Transactions involving the purchase or sale of intangible assets occur between companies in

2021 Form 10-K |

the pharmaceuticals industry and valuations are usually based on a discounted cash flow analysis incorporating the stage of completion.

The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, cost of capital, terminal values and market participants.

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Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or when an event occurs that could result in an impairment.

See Note 2 to the Consolidated Financial Statements for further information.

See Note 2 to the Consolidated Financial Statements for additional information.

Annually, the company tests its goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount.

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If the company concludes it is more likely than not that the fair value is less than its carrying amount, a quantitative impairment test is performed.

| 2020 Form 10-K

For its quantitative impairment tests, the company uses an estimated future cash flow approach that requires significant judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, the selection of an appropriate discount rate, asset groupings and other assumptions and estimates.

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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.

Significant judgment is employed in determining the appropriateness of certain of these inputs, which are disclosed in Note 11 to the Consolidated Financial Statements.

Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.

The fair value of the company's contingent consideration liabilities as of December 31, 2020 was calculated using the following significant unobservable inputs:

Range Weighted Average (a)

Discount rate 0.1% - 2.2%

Probability of payment for unachieved milestones 56% - 92%

Probability of payment for royalties by indication (b)

Projected year of payments 2021 - 2034

(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.

(b) Excludes early stage indications with 0% estimated probability of payment and includes approved indications with 100% probability of payment.

Excluding approved indications, the estimated probability of payment ranged from 56% to 89% at December 31, 2020.

Recent Accounting Pronouncements

2 unchanged sentences

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What changed 10-K

Item 7. Management’s Discussion and Analysis