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Item 7. Management’s Discussion and Analysis

2023-02-17 compared with 2022-02-18 · 194 added, 209 removed, 294 unchanged (58% of the section changed)

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(AbbVie or the company).

This commentary should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in Item 8, "Financial Statements and Supplementary Data." This section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons between 2021 and 2020.

This commentary should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in Item 8, "Financial Statements and Supplementary Data." This section of Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021.

Discussions of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

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Company Overview

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.

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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.

Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market works through largely centralized national payers system to agree on reimbursement terms.

Certain products are co-marketed or co-promoted with other companies.

AbbVie has approximately 50,000 employees.

AbbVie operates as a single global business segment.

AbbVie operates as a single global business segment and has approximately 50,000 employees.

2022 Financial Results

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The company's financial performance in 2022 included delivering worldwide net revenues of $58.1 billion, operating earnings of $18.1 billion, diluted earnings per share of $6.63 and cash flows from operations of $24.9 billion.

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.

Worldwide net revenues increased by 3% on a reported basis and 5% on a constant currency basis, reflecting growth across its immunology, neuroscience and aesthetics portfolios.

Diluted earnings per share in 2022 was $6.63 and included the following after-tax costs:

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(ii) $2.8 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.

(iii) $2.0 billion for charges related to litigation matters;

(iv) $766 million of acquisition and integration expenses;

and (v) $604 million related to intangible asset impairment.

These costs were partially offset by an after-tax gain of $126 million related to the divestiture of Pylera and a benefit of $26 million related to certain tax items.

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

In October 2021, AbbVie's board of directors declared a quarterly cash dividend of $1.41 per share of common stock payable in February 2022.

This reflects an increase of approximately 8.5% over the previous quarterly dividend of $1.30 per share of common stock.

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 approximately $2.5 billion of annual cost synergies in 2022 .

Following the closing of the Allergan acquisition in 2020, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization.

As a result of the successful execution of the integration plan, AbbVie realized $2.5 billion of annual cost synergies in 2022.

To achieve these integration objectives, AbbVie incurred total cumulative charges of $2.3 billion through 2022.

These costs consisted of severance and employee benefit costs (cash severance, non-cash severance, including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

2022 Form 10-K |

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.

Recent Global Events

Russia/Ukraine

In response to the military conflict between Russia and Ukraine, the United States and other North Atlantic Treaty Organization member states, as well as certain non-member states, announced targeted economic sanctions and export controls on Russia and Belarus.

These include restrictions on the export and transfer of products containing certain toxins, including Botox, to Russia and Belarus.

However, AbbVie is not prohibited to continue the sale of essential pharmaceutical products to help ensure patients receive an uninterrupted supply of their medicines.

In March 2022, AbbVie announced the suspension of operations for all aesthetics products in Russia.

In April 2022, AbbVie also announced that all profits from the sales of essential medicines in Russia will be donated to support direct humanitarian relief efforts in Ukraine.

While the company’s operations in Russia, Belarus and Ukraine are not significant, if the conflict escalates and results in broader economic and political concerns, AbbVie’s business could be adversely impacted.

Impact of the Coronavirus Disease 2019 (COVID-19)

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.

In response to COVID-19, 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.

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

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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.

2023 Strategic Objectives

AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution.

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

AbbVie intends to execute its strategy and advance its mission in a number of ways, including:

(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;

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

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

(iv) expanding operating margins;

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

(iv) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also reducing debt.

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 indication expansion of Skyrizi and Rinvoq, as well as Humira U.S.

sales growth.

• 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.

• Skyrizi and Rinvoq revenue growth driven by increasing market share and indication expansion.

• Advancing our hematologic oncology portfolio by increasing Venclexta market share and new indications, strong commercial execution of new product launches and effectively managing market and competitive challenges impacting Imbruvica.

• Continuing investment in the global expansion of aesthetics and increasing market penetration of Botox and Juvederm Collection.

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

• Maximizing AbbVie's existing eye care portfolio.

• Effectively managing the impact of Humira biosimilar erosion.

• The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2023.

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 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.

| 2022 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 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.

AbbVie's pipeline currently includes over 80 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, approximately 50 are in mid- and late-stage development.

The following sections summarize transitions of significant programs from mid-stage development to late-stage development as well as developments in significant late-stage and registration programs.

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Significant Programs and Developments

• In January 2021, AbbVie announced top-line results from its Phase 3 KEEPsAKE-1 and KEEPsAKE-2 clinical trials of Skyrizi in adults with active psoriatic arthritis (PsA) met the primary and ranked secondary endpoints.

• 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 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 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.

• In January 2022, AbbVie announced that the U.S.

Food and Drug Administration (FDA) approved Skyrizi for the treatment of adults with active psoriatic arthritis.

• In June 2022, AbbVie announced that the FDA approved Skyrizi for the treatment of adults with moderately to severely active Crohn’s disease.

• In November 2022, AbbVie announced that the European Commission (EC) approved Skyrizi for the treatment of adults with moderately to severely active Crohn's disease who have had inadequate response, lost response or were intolerant to conventional or biologic therapy.

• In January 2022, AbbVie announced that the FDA approved Rinvoq for the treatment of moderate to severe atopic dermatitis 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 announced top-line results from its second Phase 3 induction study, U-Excel, for Rinvoq in patients with moderate to severe Crohn’s disease who had an inadequate response or were intolerant to conventional or biologic therapy met the primary and most key secondary endpoints.

• In March 2022, AbbVie announced that the FDA approved Rinvoq for the treatment of adults with moderately to severely active ulcerative colitis (UC) who have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

• In April 2022, AbbVie announced that the FDA approved Rinvoq for the treatment of adults with active ankylosing spondylitis who have had an inadequate response or intolerance to one or more TNF blockers.

• In May 2022, AbbVie announced positive top-line results from U-ENDURE, a Phase 3 maintenance study for Rinvoq in adult patients with moderate to severe Crohn's disease who had an inadequate response or were intolerant to a conventional or biologic therapy.

The results showed that more patients treated with Rinvoq achieved the co-primary and secondary endpoints at one year compared to placebo.

• In July 2022, AbbVie announced that the EC approved Rinvoq for the treatment of adults with moderately to severely active UC who have had an inadequate response, lost response or were intolerant to either conventional therapy or a biologic agent.

• In July 2022, AbbVie announced its submission of a supplemental New Drug Application (sNDA) to the FDA and a marketing authorization application (MAA) to the EMA for Rinvoq for the treatment of adult patients with moderately to severely active Crohn’s disease.

• In July 2022, AbbVie announced that the EC approved Rinvoq for the treatment of adult patients with active non-radiographic axial spondyloarthritis (nr-axSpA).

2022 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 October 2022, AbbVie announced that the FDA approved Rinvoq for the treatment of adults with active nr-axSpA with objective signs of inflammation who have had an inadequate response or intolerance to TNF blocker therapy.

• In November 2022, AbbVie announced that the EMA's Committee for Medical Products for Human Use (CHMP) adopted an opinion following a review of the benefit-risk of medicines within the JAK inhibitor class for the treatment of inflammatory diseases, including Rinvoq.

Confirming the recommendation from the Pharmacovigilance Risk Assessment Committee (PRAC), the CHMP did not recommend changes to the current Rinvoq indication statements and recommended updates to dosage and special warnings for all JAK inhibitor products indicated for the treatment of inflammatory diseases.

These recommendations will be forwarded to the EC, which is expected to issue a final decision.

• 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 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 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.

• In May 2022, AbbVie initiated a Phase 3 clinical trial to evaluate Teliso-V versus docetaxel for the treatment of patients with previously treated c-Met overexpressing, epidermal growth factor receptor wild type, advanced/metastatic non-squamous non-small cell lung cancer.

• In March 2022, Genmab A/S (Genmab) announced that the FDA granted orphan-drug designation to the investigational medicine, epcoritamab (DuoBody-CD3xCD20), for the treatment of follicular lymphoma.

Genmab and AbbVie are co-developing epcoritamab and will share commercial responsibilities in the U.S.

and Japan, with AbbVie responsible for further global commercialization.

• In June 2022, AbbVie and Genmab announced primary results from the large B-cell lymphoma expansion cohort in the EPCORE NHL-1 phase 2 clinical trial evaluating epcoritamab, an investigational subcutaneous bispecific antibody.

In this study, epcoritamab demonstrated efficacy with durable responses in patients who had previously received at least two prior lines of anti-lymphoma therapy including chimeric antigen receptor T-cell therapy.

• In September 2022, AbbVie and Genmab submitted a biological license application (BLA) to the FDA for epcoritamab for the treatment of patients with relapsed/refractory large B-cell lymphoma.

• In October 2022, AbbVie and Genmab submitted an MAA to the EMA for epcoritamab for the treatment of patients with relapsed/refractory diffuse large B-cell lymphoma.

• In October 2022, AbbVie initiated a Phase 3 clinical trial to evaluate epcoritamab in combination with rituximab and lenalidomide compared to rituximab and lenalidomide in patients with relapsed or refractory follicular lymphoma.

• In November 2022, AbbVie announced that the FDA has accepted for priority review the BLA for epcoritamab for the treatment of relapsed/refractory large B-cell lymphoma.

• In August 2022, AbbVie announced that the FDA approved the use of Imbruvica for the treatment of pediatric patients one year and older with chronic graft versus host disease after failure of one or more lines of systemic therapy.

• In August 2022, the National Comprehensive Cancer Network (NCCN) in the United States issued updated guidelines for the management of chronic lymphocytic leukemia (CLL) re-categorizing Imbruvica from “Preferred Regimen” to “Other Recommended Regimen”.

| 2022 Form 10-K

Juvederm Collection

• In February 2022, AbbVie announced that the FDA approved Juvederm Volbella XC for improvement of infraorbital hollows in adults over the age of 21.

• In August 2022, AbbVie announced that the FDA approved Juvederm Volux XC for the improvement of jawline definition in adults over the age of 21 with moderate to severe loss of jawline definition.

• In March 2022, AbbVie initiated three Phase 3 clinical trials to evaluate the efficacy and safety of BoNTE (AGN-151586) for the treatment of glabellar lines.

• In December 2022, AbbVie announced that the FDA approved Vraylar as an adjunctive therapy to antidepressants for the treatment of major depressive disorder in adults.

• In March 2022, AbbVie announced results from the Phase 3 PROGRESS trial for Qulipta in the preventive treatment of chronic migraine in adults met the primary endpoint and resulted in significant improvements in all secondary endpoints after adjustment for multiple comparisons.

• In June 2022, AbbVie submitted an sNDA to the FDA for Qulipta for the preventative treatment of chronic migraine in adults.

• In July 2022, AbbVie submitted an MAA to the EMA for Qulipta for the prophylactic treatment of migraine in adult patients who have at least four migraine days per month.

• In May 2022, AbbVie submitted a New Drug Application to the FDA for ABBV-951 (foscarbidopa/foslevodopa) for the treatment of motor fluctuations in patients with advanced Parkinson's disease.

2022 Form 10-K |

RESULTS OF OPERATIONS

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Botox Cosmetic (a)

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

United States $ 1,654 $ 1,424 $ 687 16.2 % >100.0 % 16.2 % >100.0 %

International 961 808 425 18.9 % 90.0 % 28.8 % 83.9 %

Total $ 2,615 $ 2,232 $ 1,112 17.2 % >100.0 % 20.8 % 98.4 %

Juvederm Collection (a)

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

United States $ 548 $ 658 $ 318 (16.7) % >100.0 % (16.7) % >100.0 %

International 880 877 400 0.3 % >100.0 % 8.9 % >100.0 %

Total $ 1,428 $ 1,535 $ 718 (7.0) % >100.0 % (2.1) % >100.0 %

Other Aesthetics (a)

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

United States $ 1,122 $ 1,268 $ 666 (11.5) % 90.2 % (11.5) % 90.2 %

International 168 198 94 (14.9) % >100.0 % (8.3) % >100.0 %

Total $ 1,290 $ 1,466 $ 760 (12.0) % 93.0 % (11.1) % 91.9 %

Botox Therapeutic (a)

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

United States $ 2,255 $ 2,012 $ 1,155 12.1 % 74.3 % 12.1 % 74.3 %

International 464 439 232 5.6 % 89.0 % 15.3 % 78.8 %

Total $ 2,719 $ 2,451 $ 1,387 10.9 % 76.7 % 12.6 % 75.0 %

United States $ 2,037 $ 1,728 $ 951 17.9 % 81.7 % 17.9 % 81.7 %

International 1 — — n/m n/m n/m n/m

Total $ 2,038 $ 1,728 $ 951 17.9 % 81.7 % 17.9 % 81.7 %

Duodopa United States $ 95 $ 102 $ 103 (6.7) % (1.0) % (6.7) % (1.0) %

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Total $ 458 $ 511 $ 494 (10.4) % 3.4 % (2.0) % (0.3) %

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

United States $ 680 $ 552 $ 125 23.2 % >100.0 % 23.2 % >100.0 %

Qulipta United States $ 158 $ — $ — >100.0 % n/m >100.0 % n/m

Other Neuroscience (a)

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

United States $ 456 $ 667 $ 528 (30.5) % 26.3 % (30.5) % 26.3 %

International 19 18 11 4.8 % 77.4 % 9.0 % 64.7 %

Total $ 475 $ 685 $ 539 (29.6) % 27.2 % (29.5) % 27.0 %

2022 Form 10-K |

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Lumigan/Ganfort (a)

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

United States $ 242 $ 273 $ 165 (11.0) % 64.7 % (11.0) % 64.7 %

International 272 306 213 (11.3) % 44.1 % (3.0) % 38.1 %

Total $ 514 $ 579 $ 378 (11.2) % 53.1 % (6.8) % 49.7 %

Alphagan/Combigan (a)

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

United States $ 202 $ 373 $ 223 (45.8) % 66.5 % (45.8) % 66.5 %

International 144 156 103 (7.9) % 52.5 % 2.5 % 50.6 %

Total $ 346 $ 529 $ 326 (34.6) % 62.1 % (31.5) % 61.5 %

United States $ 621 $ 1,234 $ 755 (49.6) % 63.3 % (49.6) % 63.3 %

International 45 56 32 (20.2) % 75.3 % (13.8) % 80.1 %

Total $ 666 $ 1,290 $ 787 (48.3) % 63.8 % (48.0) % 64.0 %

Other Eye Care (a)

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 $ 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 %

United States $ 538 $ 523 $ 305 2.3 % 72.7 % 2.3 % 72.7 %

International 637 646 388 (1.2) % 66.1 % 8.7 % 61.0 %

Total $ 1,175 $ 1,169 $ 693 0.4 % 69.0 % 5.9 % 66.1 %

Other Women's Health (a)

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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Creon United States $ 1,278 $ 1,191 $ 1,114 7.3 % 6.9 % 7.3 % 6.9 %

Lupron United States $ 604 $ 600 $ 720 0.5 % (16.6) % 0.5 % (16.6) %

Linzess/Constella (a)

United States $ 1,003 $ 1,006 $ 649 (0.4) % 55.1 % (0.4) % 55.1 %

International 32 32 18 0.3 % 77.3 % 7.6 % 66.4 %

Total $ 1,035 $ 1,038 $ 667 (0.3) % 55.7 % (0.1) % 55.4 %

Linzess/Constella (a)

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) %

All other $ 4,137 $ 5,019 $ 5,119 (17.6) % (2.0) % (16.3) % (2.8) %

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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 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.

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

Global Humira sales increased 4% in 2022 primarily driven by market growth across therapeutic categories, partially offset by direct biosimilar competition in international markets.

In the United States, Humira sales increased 7% in 2022 primarily driven by market growth across all indications and favorable pricing.

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

Internationally, Humira revenues decreased 15% in 2022 primarily driven by direct biosimilar competition.

On January 31, 2023, Humira lost exclusivity in the United States.

Following this loss of exclusivity, AbbVie expects direct biosimilar competition and Humira net revenues to decline in the United States.

AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.

Net revenues for Skyrizi increased 78% in 2022 primarily driven by continued strong volume and market share uptake since launch as a treatment for plaque psoriasis as well as market growth.

Net revenues were also favorably impacted by recent regulatory approvals and expansion of Skyrizi for the treatment of psoriatic arthritis and Crohn’s disease.

Net revenues for Rinvoq increased 58% in 2022 primarily driven by continued strong volume and market share uptake since launch for the treatment of moderate to severe rheumatoid arthritis as well as market growth.

Net revenues were also favorably impacted by recent regulatory approvals and expansion of Rinvoq for the treatment of psoriatic arthritis, atopic dermatitis, ankylosing spondylitis, ulcerative colitis and non-radiographic axial spondyloarthritis.

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 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 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.

AbbVie's global Imbruvica revenues decreased 16% in 2022 as a result of decreased market demand and lower market share in the United States.

The decrease in net revenues was also partially offset by increased collaboration revenues.

Net revenues for Venclexta increased 16% in 2022 primarily due to continued expansion of Venclexta for the treatment of patients with CLL and acute myeloid leukemia.

| 2022 Form 10-K

Net revenues for Botox Cosmetic increased 21% in 2022 due to sustained consumer demand in the United States, which was moderated in the second half of the year by economic pressures impacting consumer discretionary spending, and increased investment in key international markets.

Net revenues for Juvederm Collection decreased 2% in 2022 due to economic pressures impacting consumer discretionary spending and increased pricing promotions to support the market.

International net revenues increased by 9% due to increased investment in key markets, partially offset by the suspension of aesthetic operations in Russia and the impact of COVID-19 in China.

Net revenues for Botox Therapeutic increased 13% in 2022 due to market growth.

Net revenues for Vraylar increased 18% in 2022 due to higher market share and market growth.

Net revenues for Ubrelvy increased 23% in 2022 primarily due to increased market share uptake since launch, partially offset by unfavorable pricing.

Net revenues for Qulipta increased greater than 100% in 2022 due to strong volume and market share uptake since launch for the preventative treatment of episodic migraine in adults.

Net revenues for Mavyret decreased 5% in 2022 due to the continued disruption of global hepatitis C virus markets due to the COVID-19 pandemic.

Percent change

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as a percent of net revenues 70 % 69 % 66 %

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.

Gross margin as a percentage of net revenues in 2022 increased compared to 2021.

Gross margin percentage for 2022 was favorably impacted by changes in product mix, partially offset by an intangible asset impairment charge of $770 million.

Selling, General and Administrative

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as a percent of net revenues 26 % 22 % 25 %

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

Selling, general and administrative (SG&A) expenses as a percentage of net revenues increased in 2022 compared to the prior year primarily due to the unfavorable impact of litigation reserve charges of $2.5 billion, partially offset by leverage from revenue growth and increased synergies realized.

Research and Development and Acquired IPR&D and Milestones

Percent change

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as a percent of net revenues 11 % 12 % 14 %

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

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.

Acquired IPR&D and milestones $ 697 $ 1,124 $ 1,376 (38) % (18) %

R&D expenses as a percentage of net revenues decreased in 2022 compared to 2021.

R&D expense percentage for 2022 was favorably impacted by increased scale of the combined company and synergies realized, the purchase of priority review vouchers from third parties in the prior year as well as lower integration costs related to the acquisition of Allergan.

Acquired IPR&D and milestones expense represents upfront and subsequent development milestone payments incurred prior to regulatory approval to acquire rights to in-process R&D projects through R&D collaborations, licensing arrangements or other asset acquisitions.

Acquired IPR&D and milestones expense in 2022 included a charge of $130 million related to acquiring Syndesi Therapeutics SA, charges related to other upfront payments totaling $315 million and development milestones of $252 million.

Acquired IPR&D and milestones expense in 2021 included a charge of $400 million related to exercising the company's exclusive right to acquire TeneoOne, a charge of $370 million related to a collaboration

2022 Form 10-K |

agreement with REGENXBIO Inc, charges related to other upfront payments totaling $192 million and development milestones of $162 million.

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 Operating Expense, Net

Other operating expense, net in 2022 included a one-time charge of $229 million related to an asset divested as part of the Allergan acquisition, partially offset by $172 million of income related to the sale of worldwide commercial rights of a mature brand Pylera.

Other operating expense, net in 2021 included a $500 million charge related to the extension of the Calico Life Sciences LLC collaboration.

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

Other Non-Operating Expenses

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Other expense, net 2,448 2,500 5,614

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 changes in fair value of the contingent consideration liabilities of $2.7 billion in 2021 and $5.8 billion in 2020.

Interest expense in 2022 decreased compared to 2021 primarily due to a lower average debt balance as a result of deleveraging, partially offset by the impact of higher interest rates.

Interest income in 2022 increased compared to 2021 primarily due to the impact of higher interest rates.

Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $2.8 billion in 2022 and $2.7 billion in 2021.

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 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

In 2022, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates.

In 2021, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially offset by higher discount rates.

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 income tax rate was 12% in 2022, 11% in 2021 and negative 36% in 2020.

The effective income tax rates differed from the U.S.

statutory tax rate of 21% 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 and changes in fair value of contingent consideration.

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 Puerto Rico tax credits relate to 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.

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income tax purposes.

In 2022, Puerto Rico enacted Act 52-2002 (the “Puerto Rico Act”) allowing for a transition from a Puerto Rico excise tax levied on gross inventory purchases to an income-based tax beginning in 2023.

The company completed the transition requirements of the Puerto Rico Act in 2022, resulting in the remeasurement of certain deferred tax assets and liabilities based on income tax rates at which they are expected to reverse in the future.

The net tax benefit from the remeasurement of deferred taxes related to the Puerto Rico Act was $323 million.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

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Financing activities (24,803) (19,039) (11,501)

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 in 2022 increased from 2021 primarily due to improved results of operations resulting from revenue growth and lower income tax payments, partially offset by the timing of working capital.

Operating cash flows also reflected AbbVie’s contributions to its defined benefit plans of $357 million in 2022 and $376 million in 2021.

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

| 2022 Form 10-K

Investing cash flows in 2022 included payments made for capital expenditures of $695 million, other acquisitions and investments of $539 million, $255 million cash consideration paid to acquire DJS Antibodies Ltd offset by cash acquired and net sales and maturities of investments securities totaling $92 million.

Investment 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 2022 included repayment of $3.1 billion aggregate principal amount of the company's 2.9% senior notes, $3.0 billion aggregate principal amount of the company's 2.3% senior notes, $2.9 billion aggregate principal amount of the company's 3.45% senior notes, $1.7 billion aggregate principal amount of the company's 3.25% senior notes, $1.0 billion aggregate principal amount of the company’s 3.2% senior notes and $750 million aggregate principal amount of the company's floating rate senior notes.

Additionally financing cash flows included repayment of a $2.0 billion floating term loan due May 2025 and issuance of a new $2.0 billion floating rate term loan as part of the term loan refinancing in February 2022.

Subsequent to December 31, 2022, the company repaid a $1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023.

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.

Financing cash flows also included repayment of $750 million aggregate principal amount of floating rate senior notes, $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, 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 $10.0 billion in 2022 and $9.3 billion in 2021.

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 increase in cash dividend payments was primarily driven by an increase of the dividend rate.

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

The program has no time limit and can be discontinued at any time.

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

AbbVie repurchased 8 million shares for $1.1 billion in 2022 and 6 million shares for $670 million in 2021.

AbbVie's remaining stock repurchase authorization was $1.4 billion as of December 31, 2022.

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.

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

No commercial paper borrowings were issued during 2022 or 2021 and there were no commercial paper borrowings outstanding as of December 31, 2022 or December 31, 2021.

AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.

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AbbVie currently has a $4.0 billion five-year revolving credit facility that matures in August 2024.

This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants.

This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants.

At December 31, 2022, 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 facility as of December 31, 2021 and 2020.

No amounts were outstanding under the company's credit facility as of December 31, 2022 and December 31, 2021.

2022 Form 10-K |

Access to Capital

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Credit Ratings

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.

In 2022, Moody’s Investors Service upgraded AbbVie's senior unsecured long-term credit rating to Baa1 from Baa2, affirmed its Prime-2 short-term credit rating and revised its outlook to positive from stable.

In addition, Standard and Poor's Global Ratings revised its outlook to positive from stable and affirmed its long-term issuer credit rating of BBB+.

Unfavorable changes to the ratings may have an adverse impact on future financing arrangements;

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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, 2022.

| 2021 Form 10-K

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

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tax reform enacted in 2017.

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

The one-time transition tax liability was $3.4 billion as of December 31, 2022 and is payable in four future annual installments.

Liabilities for unrecognized tax benefits totaled $6.5 billion as of December 31, 2022.

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This reflects an increase of approximately 5.0% 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.

| 2022 Form 10-K

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.

Collaborations, Licensing and Other Arrangements

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

However, if milestones for multiple products covered by these arrangements would happen to be reached in the same reporting period, the aggregate charge to expense could be material to the results of operations in that period.

However, if milestones for multiple products covered by these arrangements happen to be reached in the same reporting period, the aggregate charge to expense could be material to the results of operations in that period.

From a business perspective, the payments are viewed as positive because they signify that the product is successfully moving through development and is now generating or is more likely to generate future cash flows from product sales.

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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.

2022 Form 10-K |

The following table is an analysis of the three largest accruals for rebates and chargebacks, which comprise approximately 94% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2022.

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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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(a) Represents rebate accruals and chargeback allowances assumed in the Allergan acquisition.

Cash Discounts and Product Returns

Cash discounts and product returns, which totaled $3.6 billion in 2021, $2.4 billion in 2020 and $1.6 billion in 2019, are accounted for as variable consideration and are recorded as a reduction to revenue in the same period the related product is sold.

The reserve for cash discounts is readily determinable because the company's experience of payment history is fairly consistent.

Other Allowances

Other allowances include cash discounts, product returns, sales incentives, and other adjustments, which are accounted for as variable consideration and are recorded as a reduction to revenue in the same period the related product is sold.

Reserves for cash discounts and sales incentives are readily determinable because the company's experience of payment history is fairly consistent.

Product returns can be reliably estimated based on the company's historical return experience.

Cash discounts totaled $1.8 billion in 2022, $1.6 billion in 2021 and $1.2 billion in 2020.

Allowances other than cash discounts are not significant.

Pension and Other Post-Employment Benefits

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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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For other countries, AbbVie reviews various indices such as corporate bond and government bond benchmarks to estimate the discount rate.

| 2022 Form 10-K

AbbVie's assumed discount rates have a significant effect on the amounts reported for defined benefit pension and other post-employment plans as of December 31, 2022.

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Defined benefit plans

Service and interest cost $ (90) $ 100

Net periodic benefit cost $ (34) $ 57

Projected benefit obligation (612) 687

What changed 10-K

Item 7. Management’s Discussion and Analysis