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Item 7. Management’s Discussion and Analysis

2024-02-20 compared with 2023-02-17 · 203 added, 169 removed, 319 unchanged (54% of the section changed)

11 unchanged sentences

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

2022 Financial Results

AbbVie's strategy has focused on delivering strong financial results, maximizing the benefits of the Allergan acquisition, advancing and investing in its pipeline and returning value to shareholders while ensuring a strong, sustainable growth business over the long term.

The company's financial performance in 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 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:

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

(ii) $2.8 billion for the change in fair value of contingent consideration liabilities;

(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.

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 |

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 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.

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 effectiveness of vaccines and therapeutics.

2024 Strategic Objectives

4 unchanged sentences

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

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

• 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.

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

• Successful integration of the ImmunoGen, Inc.

and proposed Cerevel Therapeutics acquisitions.

• Advancing our oncology portfolio driven by Venclexta, strong commercial execution of Epkinly, Elahere and other new product launches and effectively managing regulatory, market and competitive challenges impacting Imbruvica.

• Aesthetics revenue growth driven by global expansion, increasing market penetration of Botox and Juvederm Collection and strong commercial execution of new product launches.

• Neuroscience revenue growth driven by Vraylar, Botox Therapeutic, Ubrelvy and Qulipta as well as strong commercial execution of new product launches.

• Maximizing AbbVie's existing eye care portfolio.

• Effectively managing the impact of Humira biosimilar erosion.

• Continuing to effectively manage the impact of Humira biosimilar erosion.

| 2023 Form 10-K

• The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2024.

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

| 2022 Form 10-K

2023 Financial Results

AbbVie's strategy has focused on delivering strong financial results, maximizing the benefits of a diversified revenue base, advancing and investing in its pipeline and returning value to shareholders while ensuring a strong, sustainable growth business over the long term.

The company's financial performance in 2023 included delivering worldwide net revenues of $54.3 billion, operating earnings of $12.8 billion, diluted earnings per share of $2.72 and cash flows from operations of $22.8 billion.

Worldwide net revenues decreased by 6% on a reported and constant currency basis due to Humira biosimilar competition which was partially offset by growth across the non-Humira product portfolio.

Diluted earnings per share in 2023 was $2.72 and included the following after-tax costs:

(i) $6.7 billion related to the amortization of intangible assets;

(ii) $5.0 billion for the change in fair value of contingent consideration liabilities;

(iii) $3.5 billion related to intangible asset impairment;

and (iv) $122 million of acquisition and integration expenses.

These costs were partially offset by an after-tax gain of $381 million related to a favorable settlement of a litigation matter.

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

The Inflation Reduction Act of 2022 has and will continue to have a significant impact on how drugs are covered and paid for under the Medicare program, including through the creation of financial penalties for drugs whose price increases outpace inflation, the redesign of Medicare Part D benefits to shift a greater portion of the costs to manufacturers, and through government price-setting for certain Medicare Part B and Part D drugs.

In 2023, Imbruvica was selected as one of the first 10 medicines subject to government-set prices beginning in 2026.

The price-setting process will conclude in 2024 and the Centers for Medicare & Medicaid Services will publish prices that will be applicable to the 10 selected drugs beginning in 2026.

It is possible that more of our products, including products that generate substantial revenues, could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections.

The effect of reducing prices and reimbursement for certain of our products would significantly impact our results of operations.

See Part I, Item 1 “Business – Regulation – Commercialization, Distribution and Manufacturing,” Part I, Item 1A “Risk Factors” and Note 7 to the consolidated financial statements for additional information.

Research and Development

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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 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.

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, approximately 50 are in mid- and late-stage development.

2 unchanged sentences

Significant Programs and Developments

• 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).

• In March 2023, the European Commission (EC) issued their final decision on the European Medicines Agency’s (EMA) review of the benefit-risk of medicines in the JAK inhibitor class for the treatment of inflammatory diseases, including Rinvoq.

Confirming the Committee for Medicinal Products for Human Use (CHMP) opinion, the previously approved Rinvoq indication statements were not changed and the dosage and special warnings for all JAK inhibitors were updated to include additional information about the risks associated with JAK inhibitors.

2023 Form 10-K |

• 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.

• 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”.

• In April 2023, AbbVie announced that the EC approved Rinvoq for the treatment of adults with moderately to severely active Crohn’s disease who have had an inadequate response, lost response or were intolerant to either conventional therapy or a biologic agent.

• In May 2023, AbbVie announced that the U.S.

Food and Drug Administration (FDA) approved Rinvoq for the treatment of adults with moderately to severely active Crohn’s disease who have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.

• In July 2023, AbbVie initiated its Phase 3 Step-Up HS study to evaluate efficacy and safety of Rinvoq in adults and adolescents with moderate to severe hidradenitis suppurativa (HS) who have failed anti-TNF therapy and/or one approved non-anti-TNF inhibitor therapy for HS.

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

• In January 2024, AbbVie initiated a Phase 3 study to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.

• In March 2023, AbbVie announced positive top-line results from its Phase 3 induction study, INSPIRE, for Skyrizi in patients with moderately to severely active ulcerative colitis met the primary and all secondary endpoints.

• In June 2023, AbbVie announced positive top-line results from its Phase 3 maintenance study, COMMAND, for Skyrizi in patients with moderately to severely active ulcerative colitis met the primary and key secondary endpoints.

• In July 2023, AbbVie announced results from the head-to-head Phase 4 IMMpulse study that evaluated the efficacy and safety of Skyrizi compared to Otezla among adult patients with moderate plaque psoriasis (PsO) eligible for systemic therapy.

In the study, significantly more patients achieved co-primary endpoints with Skyrizi versus Otezla.

Skyrizi was well-tolerated with no new safety signals identified.

• In August 2023, AbbVie submitted regulatory applications to FDA and EMA for Skyrizi for the treatment of adults with moderately to severely active ulcerative colitis.

• In September 2023, AbbVie announced results from the head-to-head Phase 3 SEQUENCE study that evaluated the efficacy and safety of Skyrizi compared to Stelara among adult patients with moderately to severely active Crohn’s disease.

In the study, Skyrizi met both primary endpoints at week 24 and achieved superiority of endoscopic remission at week 48 versus Stelara.

In addition, all secondary endpoints achieved statistical significance for superiority versus Stelara.

Skyrizi was well-tolerated with no new safety signals identified.

• In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe hidradenitis suppurativa (HS) who had previously failed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the primary endpoint of achieving HS Clinical Response at week 16.

Based on these data, AbbVie will advance its clinical program of lutikizumab in HS to Phase 3.

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

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

• In September 2023, AbbVie announced that the EC approved Tepkinly (epcoritamab) for adults with R/R DLBCL after two or more lines of systemic therapy.

• In November 2023, AbbVie announced that the FDA granted Breakthrough Therapy Designation to Epkinly for the treatment of adult patients with R/R follicular lymphoma after two or more therapies.

Additionally, the EMA has validated a Type II application for Tepkinly for the same indication.

| 2023 Form 10-K

• In December 2023, AbbVie and Genmab submitted a supplemental biological license application to the FDA for epcoritamab for the treatment of patients with R/R follicular lymphoma.

• In May 2023, AbbVie voluntarily withdrew, in the U.S., accelerated Imbruvica approvals for patients with mantle cell lymphoma (MCL) who have received at least one prior therapy and with marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy.

This voluntary action is due to requirements rel ated to the accelerated approval status granted by the FDA for MCL and MZL.

Other approved indications for Imbruvica in the U.S.

are not affected.

• In July 2023, AbbVie announced top-line results from the Phase 3 TRANSFORM-1 clinical trial evaluating the safety and efficacy of navitoclax, a BCL-XL/BCL-2 inhibitor, in combination with ruxolitinib in adult patients with primary or secondary myelofibrosis (MF).

The combination of navitoclax and ruxolitinib met the study’s primary endpoint, demonstrating statistically significant improvement in the number of patients who achieved Spleen Volume Reduction of at least 35 percent at week 24 compared to treatment with ruxolitinib and a placebo.

The study did not meet the first ranked secondary endpoint of improvement in patients’ Total Symptom Score from baseline to week 24.

The company plans to engage with regulatory agencies regarding potential next steps.

• In November 2023, AbbVie announced positive top-line results from the Phase 2 LUMINOSITY trial evaluating telisotuzumab-vedotin (Teliso-V) in patients with c-Met protein overexpression, epidermal growth factor receptor wild type, advanced/metastatic nonsquamous non-small cell lung cancer.

The results demonstrated a compelling overall response rate per independent central review of 35 percent and 23 percent across c-Met High and c-Met Intermediate patients, with no new safety risks detected.

AbbVie will discuss with global health authorities the potential to support an accelerated approval.

• In September 2023, AbbVie announced top-line results from the Phase 3 CANOVA study evaluating the safety and efficacy of Venclexta plus dexamethasone (VenDex) for patients with t(11;14)-positive relapsed or refractory (R/R) multiple myeloma who have received two or more prior treatments.

The data did not demonstrate that the treatment combination significantly improved progression-free survival (PFS), the primary endpoint of the trial.

Patients receiving VenDex showed improvement in median PFS with the combination of study comparator pomalidomide and dexamethasone (PomDex);

however, the results did not reach statistical significance.

The company is discussing the data with health authorities to further understand the potential of Venclexta as a biomarker-driven therapy in multiple myeloma.

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.

• In May 2023, AbbVie announced that the FDA approved Skinvive by Juvederm to improve skin smoothness of the cheeks in adults over the age of 21.

Botox Cosmetic

• In September 2023, AbbVie announced positive top-line results from the second of three Phase 3 clinical studies evaluating Botox Cosmetic for the treatment of moderate to severe platysma prominence associated with platysma muscle activity.

All primary and secondary endpoints were met in the second Phase 3 study and results were consistent with findings from the first Phase 3 study.

• In December 2023, AbbVie submitted regulatory application to the FDA for Botox Cosmetic for the treatment of moderate to severe platysma prominence associated with platysma muscle activity.

2023 Form 10-K |

• In October 2023, AbbVie announced positive top-line results from two pivotal Phase 3 clinical studies evaluating trenibotulinumtoxinE ( BoNT/E) for the treatment of moderate to severe glabellar lines.

All primary and secondary endpoints were met for both Phase 3 studies and results support BoNT/E as a novel botulinum neurotoxin serotype E characterized by a rapid onset of action as early as 8 hours after administration and short duration of effect within 2-3 weeks.

• In April 2023, A bbVie announced that the FDA approved Qulipta for the preventive treatment of chronic migraine in adults.

• In August 2023, AbbVie announced that the EC approved Aquipta (Qulipta) for the preventive treatment of migraine in adults who have four or more migraine days per month.

• In March 2023, AbbVie announced that the FDA issued a Complete Response Letter (CRL) for the New Drug Application (NDA) for ABBV-951 (foscarbidopa/foslevodopa) for the treatment of motor fluctuations in adults with advanced Parkinson’s disease.

In its letter, the FDA requested additional information about the device (pump) as part of the NDA review.

The CRL did not request that AbbVie conduct additional efficacy and safety trials related to the drug.

• In December 2023, AbbVie submitted the Complete Response Resubmission for NDA for ABBV-951.

• In January 2024, AbbVie announced the launch of Produodopa (ABBV-951) in the European Union for the treatment of advanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of Parkinson's medicinal products have not given satisfactory results.

| 2023 Form 10-K

RESULTS OF OPERATIONS

22 unchanged sentences

Total $ 3,969 $ 2,522 $ 1,651 57.4 % 52.8 % 58.4 % 58.1 %

Hematologic Oncology

Imbruvica United States $ 2,665 $ 3,426 $ 4,321 (22.2) % (20.7) % (22.2) % (20.7) %

4 unchanged sentences

Total $ 2,288 $ 2,009 $ 1,820 13.9 % 10.4 % 15.0 % 16.1 %

Botox Cosmetic (a)

Epkinly Collaboration Revenues

$ 28 $ — $ — n/m n/m n/m n/m

International

3 — — n/m n/m n/m n/m

$ 31 $ — $ — n/m n/m n/m n/m

Botox Cosmetic

United States $ 1,670 $ 1,654 $ 1,424 1.0 % 16.2 % 1.0 % 16.2 %

1 unchanged sentence

Total $ 2,682 $ 2,615 $ 2,232 2.6 % 17.2 % 4.2 % 20.8 %

Juvederm Collection (a)

Juvederm Collection

United States $ 519 $ 548 $ 658 (5.4) % (16.7) % (5.4) % (16.7) %

1 unchanged sentence

Total $ 1,378 $ 1,428 $ 1,535 (3.6) % (7.0) % (0.9) % (2.1) %

Other Aesthetics (a)

Other Aesthetics

United States $ 1,060 $ 1,122 $ 1,268 (5.6) % (11.5) % (5.6) % (11.5) %

1 unchanged sentence

Total $ 1,234 $ 1,290 $ 1,466 (4.4) % (12.0) % (3.8) % (11.1) %

Botox Therapeutic (a)

Botox Therapeutic

United States $ 2,476 $ 2,255 $ 2,012 9.8 % 12.1 % 9.8 % 12.1 %

2 unchanged sentences

United States $ 2,755 $ 2,037 $ 1,728 35.2 % 17.9 % 35.2 % 17.9 %

International 1 — — n/m n/m n/m n/m

International 4 1 — >100.0 % n/m >100.0 % n/m

Total $ 2,759 $ 2,038 $ 1,728 35.4 % 17.9 % 35.4 % 17.9 %

3 unchanged sentences

United States $ 803 $ 680 $ 552 18.2 % 23.2 % 18.2 % 23.2 %

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

Other Neuroscience (a)

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

International

12 — — >100.0 % n/m >100.0 % n/m

$ 815 $ 680 $ 552 19.9 % 23.2 % 19.9 % 23.2 %

Qulipta United States $ 405 $ 158 $ — >100.0 % >100.0 % >100.0 % >100.0 %

International 3 — — >100.0 % n/m >100.0 % n/m

Total $ 408 $ 158 $ — >100.0 % >100.0 % >100.0 % >100.0 %

3 unchanged sentences

years ended December 31 (dollars in millions) 2023 2022 2021 2023 2022 2023 2022

Lumigan/Ganfort (a)

Other Neuroscience

United States $ 254 $ 456 $ 667 (44.4) % (30.5) % (44.4) % (30.5) %

1 unchanged sentence

Total $ 276 $ 475 $ 685 (41.9) % (29.6) % (41.7) % (29.5) %

Alphagan/Combigan (a)

Ozurdex United States

$ 143 $ 139 $ 130 2.7 % 6.9 % 2.7 % 6.9 %

International

329 289 288 14.0 % 0.3 % 15.9 % 12.9 %

$ 472 $ 428 $ 418 10.3 % 2.4 % 11.6 % 11.0 %

Lumigan/Ganfort

United States $ 173 $ 242 $ 273 (28.4) % (11.0) % (28.4) % (11.0) %

1 unchanged sentence

Total $ 432 $ 514 $ 579 (15.9) % (11.2) % (15.3) % (6.8) %

Alphagan/Combigan

United States $ 121 $ 202 $ 373 (40.1) % (45.8) % (40.1) % (45.8) %

1 unchanged sentence

Total $ 272 $ 346 $ 529 (21.4) % (34.6) % (19.1) % (31.5) %

Other Eye Care (a)

United States $ 382 $ 621 $ 1,234 (38.5) % (49.6) % (38.5) % (49.6) %

1 unchanged sentence

Total $ 436 $ 666 $ 1,290 (34.6) % (48.3) % (34.2) % (48.0) %

Other Eye Care

United States $ 433 $ 399 $ 393 9.0 % 0.8 % 9.0 % 0.8 %

International 370 348 358 6.1 % (2.4) % 8.7 % 5.4 %

Total $ 803 $ 747 $ 751 7.6 % (0.7) % 8.8 % 3.0 %

Other Key Products

3 unchanged sentences

Creon United States $ 1,268 $ 1,278 $ 1,191 (0.8) % 7.3 % (0.8) % 7.3 %

Linzess/Constella (a)

Linzess/Constella

United States $ 1,073 $ 1,003 $ 1,006 7.1 % (0.4) % 7.1 % (0.4) %

4 unchanged sentences

n/m – Not meaningful

(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 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.

Global Humira sales decreased 32% in 2023.

In the United States, Humira sales decreased 35% in 2023 primarily driven by direct biosimilar competition following loss of exclusivity on January 31, 2023.

Internationally, Humira revenues decreased 12% in 2023 primarily driven by the continued impact of direct biosimilar competition.

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

Net revenues for Skyrizi increased 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 Skyrizi increased 51% in 2023 primarily driven by continued strong market share uptake as well as market growth across all indications, partially offset by unfavorable pricing.

Net revenues for Rinvoq increased 58% in 2023 primarily driven by continued strong market share uptake as well as market growth across all indications, partially offset by unfavorable pricing.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie's 50% share of Imbruvica profit.

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.

AbbVie's global Imbruvica revenues decreased 21% in 2023 primarily driven by decreased demand and lower market share in the United States as well as decreased collaboration revenues.

Net revenues for Venclexta increased 15% in 2023.

In the United States, Venclexta net revenues increased 8% driven by continued market growth across all indications, market share uptake as well as favorable pricing.

Internationally, Venclexta net revenues increased 22% primarily driven by continued market share uptake and market growth across all indications.

Net revenues for Botox Cosmetic increased 4% in 2023.

In the United States, Botox Cosmetic net revenues increased 1% driven by increased consumer demand due to economic recovery in the toxin market.

Internationally, Botox Cosmetic net revenues increased 10% primarily driven by recovery from COVID-19 in China and increased consumer demand across other key international markets.

2023 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.

Net revenues for Juvederm Collection decreased 1% in 2023.

In the United States, Juvederm Collection net revenues decreased 5% primarily driven by decreased consumer demand due to economic pressures, partially offset by new product launches.

Internationally, Juvederm Collection revenue increased 2% driven by increased consumer demand across key international markets and price.

Net revenues for Botox Therapeutic increased 11% in 2023 driven by market growth and market share uptake, partially offset by unfavorable pricing.

Net revenues for Vraylar increased 35% in 2023 primarily driven by continued market share uptake as well as market growth.

Net revenues were also favorably impacted by the regulatory approval of Vraylar as an adjunctive therapy for the treatment of major depressive disorder in adults.

Net revenues for Ubrelvy increased 20% in 2023 primarily driven by continued market share uptake as well as market growth.

Net revenues for Qulipta increased greater than 100% in 2023 primarily driven by continued strong market share uptake as well as market growth.

Net revenues were also favorably impacted by the regulatory approval of Qulipta for the preventive treatment of chronic migraine in adults.

Percent change

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as a percent of net revenues 62 % 70 % 69 %

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.

Gross margin as a percentage of net revenues in 2023 decreased compared to 2022.

Gross margin percentage for 2023 was unfavorably impacted by intangible asset impairment charges of $3.6 billion primarily related to Imbruvica, CoolSculpting and Liletta, higher amortization of intangibles and changes in product mix, partially offset by the favorable tax law changes in Puerto Rico.

Selling, General and Administrative

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as a percent of net revenues 24 % 26 % 22 %

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

Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased in 2023 compared to the prior year primarily due to income of $485 million driven by a favorable settlement of a litigation matter in 2023 compared to litigation reserve charges of $2.5 billion in 2022, partially offset by the unfavorable impact of increased brand investments and lower net revenues primarily driven by the Humira loss of exclusivity in the United States.

Research and Development

Percent change

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

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

Research and development (R&D) expenses as a percentage of net revenues increased in 2023 compared to 2022.

R&D expense percentage for 2023 was unfavorably impacted by increased funding to support all stages of the company's pipeline assets and lower net revenues primarily driven by the Humira loss of exclusivity in the United States.

R&D expense percentage in 2023 was also unfavorably impacted by an intangible asset impairment charge of $630 million.

| 2023 Form 10-K

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

Acquired IPR&D and Milestones

years ended December 31 (in millions)

2023 2022 2021

Upfront charges

$ 582 $ 445 $ 962

Development milestones

Acquired IPR&D and milestones $ 778 $ 697 $ 1,124

Acquired IPR&D and milestones expense in 2022 included a charge related to the upfront payment of $130 million to acquire Syndesi Therapeutics SA.

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

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.

Other Operating Expense (Income), Net

Other operating expense (income), net included a gain of $169 million in 2023 and a charge of $229 million in 2022 related to a development liability associated with an asset divested as part of Allergan acquisition.

Other operating expense (income), net in 2022 also included $172 million of income related to the sale of worldwide commercial rights of a mature brand Pylera.

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

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Other expense, net 4,677 2,448 2,500

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 expense in 2023 decreased compared to 2022 primarily driven by lower average debt balances as a result of deleveraging, partially offset by the impact of higher interest rates.

Interest income in 2023 increased compared to 2022 primarily due to the impact of higher interest rates.

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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 2023, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, the passage of time and lower discount rates.

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

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

Income Tax Expense

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 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.

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

income tax purposes.

The effective income tax rate was 22% in 2023, 12% in 2022 and 11% in 2021.

The effective income tax rates differed from the statutory tax rate principally due to the impact of foreign operations with lower income tax rates in locations outside the United States, the U.S.

global minimum tax, changes in fair value of contingent consideration, tax credits and incentives in the United States, Puerto Rico and other foreign tax jurisdictions, and business development activities.

The effective income tax rate in 2023 was higher than prior periods due to increased changes in fair value of contingent consideration, intangible asset impairments and the impacts of the transition from the Puerto Rico excise tax to an income tax.

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

The company completed the transition requirements of 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.

The net tax benefit recognized in 2022 from the remeasurement of deferred taxes related to the Puerto Rico Act was $323 million.

Our net earnings and cash flows could be affected by future tax policy and law changes in the jurisdictions in which we operate, including changes in tax law related to the projects undertaken by the Organization for Economic Cooperation and Development ("OECD").

These projects include a global minimum tax rate of 15%, referred to as "Pillar Two", and the creation of a new global system to tax income based on the location to which products are sold, referred to as "Pillar One." Numerous countries have agreed to a statement in support of the OECD model rules and European Union member states have agreed to

2023 Form 10-K |

implement Pillar Two.

This implementation includes aspects of legislation that are effective starting in 2024.

More widespread implementation of Pillar Two is expected to continue, and incremental aspects of the legislation may start in 2025.

Significant details around the provision are still emerging.

These changes increase tax uncertainty and may adversely impact income tax expense in future years.

We will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on our business in future periods.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

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Financing activities (17,222) (24,803) (19,039)

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 in 2023 decreased from 2022 primarily due to decreased results of operations driven by lower net revenues and higher 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 $366 million in 2023 and $357 million in 2022.

| 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 2023 included payments made for other acquisitions and investments of $1.2 billion, capital expenditures of $777 million, and net purchases of investments securities totaling $22 million.

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 revenues and maturities of investments securities totaling $92 million.

Financing cash flows in 2023 included repayment of $1.0 billion floating rate three-year term loan, $1.0 billion aggregate principal amount of the company's 2.85% senior notes and $350 million aggregate principal amount of the company's 2.80% senior notes.

During the quarter ended December 31, 2023 the company also repaid €500 million aggregate principal amount of 1.50% senior euro notes and $1.3 billion aggregate principal amount of 3.75% senior notes at maturity.

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 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 also included cash dividend payments of $10.5 billion in 2023 and $10.0 billion in 2022.

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

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

AbbVie repurchased 10 million shares for $1.6 billion in 2023 and 8 million shares for $1.1 billion in 2022.

AbbVie's remaining stock repurchase authorization was $4.8 billion as of December 31, 2023.

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No commercial paper borrowings were issued during 2023 or 2022 and there were no commercial paper borrowings outstanding as of December 31, 2023 or December 31, 2022.

Subsequent to 2023, AbbVie issued commercial paper borrowings of which $1.7 billion were outstanding as of the date of filing this Annual Report on Form 10-K.

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

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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.

| 2023 Form 10-K

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

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

In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility.

The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028.

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

At December 31, 2023, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant.

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

2022 Form 10-K |

No amounts were outstanding under the company's credit facility as of December 31, 2023, December 31, 2022, or December 31, 2021.

In connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and a 364-day term loan credit agreement with an aggregate principal amount of $5.0 billion.

No amounts were drawn under the bridge credit agreement or term loan credit agreement as of December 31, 2023 .

Subsequent to 2023, on February 12, 2024, AbbVie borrowed $5.0 billion under the term loan credit agreement.

See Note 5 and Note 10 to the consolidated financial statements for additional information.

Access to Capital

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Credit Ratings

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+.

In 2023, Moody’s Investors Service upgraded AbbVie’s senior unsecured long-term credit rating to A3 with a stable outlook from Baa1 with a positive outlook and affirmed AbbVie’s Prime-2 short-term credit rating.

In addition, Standard and Poor's Global ratings upgraded AbbVie's long-term issuer credit rating to A- with a stable outlook from BBB+ with a positive outlook.

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

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

2023 Form 10-K |

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

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tax reform enacted in 2017.

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

The one-time transition tax liability was $3.0 billion as of December 31, 2023 and is payable in three future annual installments.

Liabilities for unrecognized tax benefits totaled $6.7 billion as of December 31, 2023.

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This reflects an increase of approximately 4.7% over the previous quarterly rate.

| 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.

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

In the fourth quarter of 2023, AbbVie entered into a definitive agreement to acquire Cerevel Therapeutics for a total value of approximately $8.7 billion.

The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.

Subsequent to 2023, on February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen for a total value of approximately $10.1 billion.

In connection with these acquisitions, AbbVie entered into several debt and financing arrangements.

See Note 5 and Note 10 to the consolidated financial statements for additional information.

Collaborations, Licensing and Other Arrangements

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Sales, value add and other taxes collected concurrent with revenue-producing activities are excluded from revenue.

AbbVie generates revenue primarily from product sales.

| 2023 Form 10-K

generates revenue primarily from product sales.

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

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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 2023.

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Rebates Wholesaler

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

Additions (a)

Balance as of December 31, 2020 $ 2,945 $ 2,907 $ 741

Provisions 9,622 11,306 11,286

Payments (8,751) (11,116) (11,125)

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

Balance as of December 31, 2021 3,816 3,097 902

Provisions 11,713 14,119 13,070

Payments (10,331) (12,974) (12,829)

Balance at December 31, 2021 3,816 3,097 902

Balance as of December 31, 2022 5,198 4,242 1,143

Provisions 15,153 23,978 14,191

Payments (15,054) (21,200) (14,162)

Balance at December 31, 2022 $ 5,198 $ 4,242 $ 1,143

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

Balance as of December 31, 2023 $ 5,297 $ 7,020 $ 1,172

Other Allowances

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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.

2023 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, 2023.

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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 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

| 2023 Form 10-K

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

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

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In-process research and development (IPR&D) acquired in a business combination is capitalized as an indefinite-lived intangible asset until regulatory approval is obtained, at which time it is accounted for as a definite-lived asset and amortized over its estimated useful life, or discontinuation, at which point the intangible asset will be written off.

IPR&D acquired in transactions that are not business combinations is expensed immediately, unless deemed to have an alternative

2022 Form 10-K |

IPR&D acquired in transactions that are not business combinations is expensed immediately, unless deemed to have an alternative future use.

Payments made to third parties subsequent to regulatory approval are capitalized and amortized over the remaining useful life.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis