AbbVie (ABBV) 10-K risk factor changes: FY2018 vs FY2017

| 10 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

As patents for certain of its products expire, AbbVie will or could face competition from lower priced generic [added: or biosimilar] products.

If AbbVie's competitive position is compromised because of [removed: generics] [added: generics, biosimilars] or otherwise, it could have a material adverse effect on AbbVie's business and results of operations.

In addition, proposals emerge from time to time for legislation to further encourage the early and rapid approval of generic [removed: drugs.][added: drugs or biosimilars.]

AbbVie's principal patents and trademarks are described in greater detail in Item 1, "Business—Intellectual Property Protection and Regulatory Exclusivity" and Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations," and litigation regarding these patents is described in Item 3, "Legal Proceedings." The United States composition of matter patent for HUMIRA, which is AbbVie's largest product and had worldwide net revenues of approximately [removed: $18.4] [added: $19.9] billion in [removed: 2017,] [added: 2018,] expired in December 2016, and the equivalent European Union patent [removed: is expected to expire] [added: expired] in the majority of European Union countries in October 2018.

A successful claim of patent or other intellectual property infringement could subject AbbVie to significant damages or an injunction [added: preventing the manufacture, sale, or use of the affected AbbVie product or products.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 11 |

HUMIRA accounted for approximately [removed: 65%] [added: 61%] of AbbVie's total net revenues in [removed: 2017.][added: 2018.]

[removed: Products that appear promising in development may fail to reach the market for numerous reasons, including failure to demonstrate effectiveness, safety concerns, superior safety or efficacy of] competing therapies, failure to achieve positive clinical or pre-clinical outcomes beyond the current standards of care, inability to obtain necessary regulatory approvals or delays in the approval of new products and new indications, limited scope of approved uses, excessive costs to manufacture, the failure to obtain or maintain intellectual property rights, or infringement of the intellectual property rights of others.

| 12 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

In addition, companies are developing biosimilars in other countries that could [added: and do] compete with AbbVie’s biologic [removed: products.][added: products, including HUMIRA.]

As competitors [removed: are able to] obtain marketing approval for biosimilars referencing AbbVie’s biologic products, AbbVie’s products may become subject to competition from such biosimilars, with the attendant competitive pressure and consequences.

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 13 |

New data about AbbVie's products, or products similar to its products, could negatively impact demand for AbbVie's products due to real or perceived safety issues or uncertainty regarding efficacy and, in some cases, could result in product [removed: withdrawal.]

| 14 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

[added: The potential for continuing] changes to the health care system in the United States and the increased purchasing power of entities that negotiate on behalf of Medicare, Medicaid and private sector beneficiaries could result in additional pricing pressures.

These requirements include, among other things, regulations regarding manufacturing practices, product labeling and advertising and post-marketing reporting, including adverse event reports and [removed: field alerts due to manufacturing quality concerns.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 15 |

Net revenues outside of the United States make up approximately [removed: 35%] [added: 34%] of AbbVie's total net revenues in [removed: 2017.][added: 2018.]

If AbbVie does not effectively and profitably commercialize [removed: IMBRUVICA,] [added: its products,] AbbVie's revenues and financial condition could be adversely affected.

AbbVie must effectively and profitably commercialize [removed: IMBRUVICA] [added: its principal products] by creating and meeting continued market demand; achieving market acceptance and generating product sales; ensuring that the active pharmaceutical [removed: ingredient] [added: ingredient(s)] for [removed: IMBRUVICA] [added: a product] and the finished product are manufactured in sufficient quantities and in compliance with requirements of the FDA and similar foreign regulatory agencies and with acceptable quality and pricing to meet commercial demand; and ensuring that the entire supply chain efficiently and consistently delivers [removed: IMBRUVICA to] AbbVie's [added: products to its] customers.

| 16 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

[removed: IMBRUVICA] [added: The commercialization of AbbVie products] may not be successful due to, among other things, unexpected challenges from competitors, new safety issues or concerns being reported that may impact or narrow [removed: the] approved indications, the relative price of [removed: IMBRUVICA] [added: AbbVie's product] as compared to alternative treatment options and changes to [removed: the] [added: a product's] label [removed: for IMBRUVICA] that further restrict its marketing.

If the commercialization of [removed: IMBRUVICA] [added: AbbVie's principal products] is unsuccessful, AbbVie's ability to generate revenue from product sales [removed: and realize the anticipated benefits of the merger with Pharmacyclics] will be adversely affected.

In [removed: 2017,] [added: 2018,] three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for substantially all of AbbVie's sales in the United States.

To the extent AbbVie incurs additional [removed: indebtedness,] [added: indebtedness or interest rates increase,] these risks could increase.

[removed: If AbbVie loses its investment grade credit rating or adequate] funds are not available on acceptable terms, AbbVie may be unable to fund its expansion, successfully develop or enhance products, or respond to competitive pressures, any of which could negatively affect AbbVie's business.

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 17 |

AbbVie relies on sophisticated [added: software applications and complex] information technology systems to operate its business.

These systems are potentially vulnerable to malicious intrusion, random attack, loss of data privacy, [added: disruption, degradation] or breakdown.

Data privacy or security breaches by employees or others may [added: result in the failure of critical business operations or may] cause sensitive data, including intellectual property, trade secrets or personal information belonging to AbbVie, its patients, customers or business partners, to be exposed to unauthorized persons or to the public.

| 18 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

Products that appear promising in development may fail to reach the market for numerous reasons, including failure to demonstrate effectiveness, safety concerns, superior safety or efficacy of

withdrawal.

field alerts due to manufacturing quality concerns.

If AbbVie loses its investment grade credit rating or adequate

Such adverse consequences could include loss of revenue, or the loss of critical or sensitive information from AbbVie’s or third-party providers’ databases or IT systems and could also result in legal, financial, reputational or business harm to AbbVie and potentially substantial remediation costs.

| | | | |

| --- | --- | --- | --- |

Because HUMIRA is a biologic and biologics cannot be readily substituted, it is uncertain what impact the loss of patent protection would have on the sales of HUMIRA.

preventing the manufacture, sale, or use of the affected AbbVie product or products.

For example, AbbVie is collaborating with Roche Holding AG to develop and commercialize a next-generation Bcl-2 inhibitor, Venclexta (venetoclax), for patients with relapsed/refractory chronic lymphocytic leukemia and AbbVie is investigating its efficacy for additional indications.

The potential for continuing

AbbVie could be subject to increased monetary penalties and/or other sanctions, including exclusion from federal health care programs, if it fails to comply with the terms of the May 7, 2012 resolution of the Department of Justice's investigation into sales and marketing activities for Depakote.

On May 7, 2012, Abbott settled United States federal and 49 state investigations into its sales and marketing activities for Depakote by pleading guilty to a misdemeanor violation of the Food, Drug and Cosmetic Act, agreeing to pay

approximately $700 million in criminal fines and forfeitures and approximately $900 million to resolve civil claims, and submitting to a term of probation.

The term of probation ended January 1, 2016 upon AbbVie satisfying all of the probation conditions.

However, if AbbVie violates any remaining terms of the plea agreement, it may face additional monetary sanctions and other such remedies as the court deems appropriate.

In addition, Abbott entered into a five-year CIA with the Office of Inspector General for the United States Department of Health and Human Services (OIG).

The effective date of the CIA is October 11, 2012.

The obligations of the CIA have transferred to and become fully binding on AbbVie.

The CIA requires enhancements to AbbVie's compliance program, fulfillment of reporting and monitoring obligations, management certifications and resolutions from AbbVie's board of directors, among other requirements.

Compliance with the requirements of the settlement will impose additional costs and burdens on AbbVie, including in the form of employee training, third party reviews, compliance monitoring, reporting obligations and management attention.

If AbbVie fails to comply with the CIA, the OIG may impose monetary penalties or exclude AbbVie from federal health care programs, including Medicare and Medicaid.

AbbVie and Abbott may be subject to third party claims and shareholder lawsuits in connection with the settlement, and AbbVie may be required to indemnify all or a portion of Abbott's costs.

The commercialization of

| | | 2017 Form 10-K \|  19 |

The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of December 31, [removed: 2017] [added: 2018] and [removed: 2016] [added: 2017] and results of operations for each of the three years in the period ended December 31, [removed: 2017.][added: 2018.]

[removed: AbbVie's mission is to use] [added: AbbVie uses] its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world's most complex and serious diseases.

AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C [added: virus] (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's [removed: disease and multiple sclerosis;] [added: disease;] metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; [added: pain associated with endometriosis;] as well as other serious health conditions.

AbbVie also has a pipeline of promising new medicines [added: in clinical development] across such important medical specialties as immunology, oncology and [removed: neurology,] [added: neuroscience,] with additional targeted investment in cystic fibrosis and women's health.

Outside the United States, [removed: sales] [added: products] are [removed: made either directly] [added: sold primarily] to customers or through distributors, depending on the market served.

AbbVie has approximately [removed: 29,000] [added: 30,000] employees.

[removed: 2017] [added: 2018] Financial Results

The company's financial performance in [removed: 2017] [added: 2018] included delivering worldwide net revenues of [removed: $28.2] [added: $32.8] billion, operating earnings of [removed: $9.6 billion and] [added: $6.4 billion,] diluted earnings per share of [removed: $3.30.][added: $3.66 and cash flows from operations of $13.4 billion.]

Worldwide net revenues grew by [removed: 10%] [added: 16%, or 15%] on a constant currency basis, driven primarily by [removed: the continued strength of HUMIRA,] revenue growth related to [added: MAVYRET,] IMBRUVICA and [removed: other key products including Creon and Duodopa] [added: VENCLEXTA,] and the [removed: launch] [added: continued strength] of [removed: HCV product MAVYRET.][added: HUMIRA.]

[removed: Additional after-tax costs that impacted 2017 diluted] [added: Diluted] earnings per share [added: in 2018 was $3.66 and] included the [removed: following:] [added: following after-tax costs:] (i) [removed: $809 million related to the amortization] [added: a Stemcentrx-related impairment charge] of [removed: intangible assets; (ii) $625 million for] [added: $4.1 billion net of] the [removed: change in] [added: related] fair value [removed: of] [added: adjustment to] contingent consideration liabilities; [added: (ii) $1.1 billion of intangible asset amortization;] (iii) [removed: $327] [added: $500] million [added: as a result of a collaboration agreement extension with Calico Life Sciences LLC (Calico); (iv) $424 million] for acquired in-process research and development (IPR&D); [removed: (iv)] [added: (v) $478 million for the change in fair value of contingent consideration liabilities excluding the fair value adjustment associated with the Stemcentrx-related impairment; (vi)] litigation reserve charges of [removed: $286] [added: $282] million; [removed: (v) an intangible asset impairment charge] [added: (vii) charitable contributions] of [removed: $244 million; (vi) milestone payments] [added: $271 million as part] of [removed: $143 million;] [added: AbbVie's previously announced plan to make contributions to U.S. not-for-profit organizations in 2018;] and [removed: (vii) acquisition related costs] [added: (viii) milestone payments] of [removed: $49] [added: $137] million.

[removed: 2017] [added: Additionally,] financial results [removed: also] reflected continued added funding to support [added: all stages of] AbbVie’s emerging [removed: mid- and late-stage] pipeline assets and continued investment in AbbVie’s growth brands.

In [removed: October 2017,] [added: November 2018,] AbbVie's board of directors declared a quarterly cash dividend of [removed: $0.71] [added: $1.07] per share of common stock payable in February [removed: 2018.][added: 2019.]

This reflected an increase of approximately [removed: 11%] [added: 11.5%] over the previous quarterly dividend of [removed: $0.64] [added: $0.96] per share of common stock.

| [removed: 28 ] [added: 26 ] \| [removed: 2017] [added: 2018] Form 10-K | | |

[removed: 2018] [added: 2019] Strategic Objectives

AbbVie intends to continue to advance its mission in a number of ways, including: (i) growing revenues by diversifying revenue streams, driving late-stage pipeline assets to the market and ensuring strong commercial execution of new product launches; (ii) continued investment and expansion in its pipeline in support of opportunities in immunology, oncology and [removed: neurology] [added: neuroscience, with additional targeted investment in cystic fibrosis and women's health] as well as continued investment in key on-market products; (iii) expanding operating margins; and (iv) returning cash to shareholders via dividends and share repurchases.

| • | HUMIRA [added: U.S.] sales growth by driving biologic penetration across disease [removed: categories,] [added: categories and] maintaining market [removed: leadership and effectively managing biosimilar erosion.] [added: leadership.] |

| • | The strong execution of new product [removed: launches, including MAVYRET.] [added: launches across multiple therapeutic areas.] |

| • | The favorable impact of pipeline products [added: and indications recently] approved [removed: in 2017] or currently under regulatory review where approval is expected in [removed: 2018.] [added: 2019.] These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7. |

AbbVie's pipeline currently includes more than 60 compounds or indications in clinical development individually or under collaboration or license agreements and is focused on such important medical specialties as immunology, oncology and [removed: neurology] [added: neuroscience] along with targeted investments in cystic fibrosis and women's health.

| • | In June [removed: 2017,] [added: 2018,] AbbVie announced that top-line results from the Phase 3 [removed: SELECT-NEXT] [added: SELECT-EARLY] clinical trial evaluating upadacitinib [removed: (ABT-494), the company’s selective JAK1 inhibitor currently in late-stage development for rheumatoid arthritis (RA), met all primary and ranked secondary endpoints] [added: versus methotrexate] in [added: adult] patients with moderate to severe RA who [removed: did not adequately respond to treatment with conventional synthetic disease modifying anti-rheumatic drugs (DMARDs).] [added: were methotrexate-naïve met all primary and ranked secondary endpoints.] The safety profile of upadacitinib was consistent with previously reported [removed: Phase 2] [added: clinical] trials and no new safety signals were detected. |

| • | In [removed: September 2017,] [added: April 2018,] AbbVie announced that top-line results from the Phase 3 [removed: SELECT-BEYOND] [added: SELECT-COMPARE] clinical trial evaluating upadacitinib met all primary and ranked secondary endpoints in patients with moderate to severe [removed: RA] [added: rheumatoid arthritis (RA)] who [removed: did not adequately respond or were intolerant to treatment with biologic DMARDs.] [added: are on a stable background of methotrexate and who have an inadequate response.] The safety profile of upadacitinib was consistent with previously reported [removed: Phase 2] [added: clinical] trials and [removed: the Phase 3 SELECT-NEXT clinical trial, with] no new safety signals [added: were] detected. |

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed:  29] [added:  27] |

| • | In [removed: December 2017,] [added: February 2018,] AbbVie announced that top-line results from [removed: the] [added: two] Phase 3 [removed: SELECT-MONOTHERAPY] clinical [removed: trial] [added: trials] evaluating [removed: upadacitinib] [added: risankizumab with 12-week dosing compared to ustekinumab] met [removed: all primary and key] [added: ranked additional] secondary endpoints [removed: in] [added: for the treatment of] patients with moderate to severe [removed: RA who did not adequately respond to treatment with methotrexate.] [added: chronic plaque psoriasis.] The [added: initial results from these clinical trials were previously announced in October 2017. The] safety profile [removed: of upadacitinib] was consistent with [added: all] previously reported [removed: Phase 3 SELECT clinical trials] [added: studies,] and [removed: Phase 2 trials, with] [added: there were] no new safety signals [removed: detected.] [added: detected across the two studies.] |

| • | In [removed: 2017,] [added: May 2018,] AbbVie initiated [added: a] Phase [removed: 3] [added: 2b/3] clinical [removed: trials] [added: trial] to evaluate the [removed: safety and] efficacy [removed: of upadacitinib in subjects with moderately to severely active Crohn’s disease] and [added: safety of risankizumab versus placebo] in subjects with moderately to severely active [removed: psoriatic arthritis.] [added: ulcerative colitis.] |

| • | In January 2018, the U.S. Food and Drug Administration (FDA) granted breakthrough therapy designation for [removed: upadacitinib] [added: upadacitinib, an investigational oral JAK1-selective inhibitor,] in adult patients with moderate to severe atopic dermatitis who are candidates for systemic therapy. |

| • | In [removed: December 2017,] [added: January 2018,] AbbVie initiated [removed: a] [added: two] Phase 3 clinical [removed: trial] [added: trials] to evaluate the [removed: safety and] efficacy [added: and safety] of [removed: risankizumab] [added: risankizumab, an investigational interleukin-23 (IL-23) inhibitor, versus placebo during induction therapy] in subjects with moderately to severely active Crohn’s disease. |

| • | In [removed: December 2017,] [added: June 2018,] AbbVie announced that [added: results from an interim analysis of] the Phase 3 iNNOVATE [removed: clinical trial] [added: study] evaluating IMBRUVICA [removed: in combination with rituximab] [added: plus Rituxan (rituximab)] in [removed: patients with] [added: previously] untreated [removed: (treatment-naïve)] and [removed: previously-treated] [added: relapsed/refractory (R/R) patients with] Waldenström’s macroglobulinemia (WM) met its primary endpoint. [removed: This is the first and only treatment approved for newly or previously-treated patients with WM.] |

| [removed: 30 ] [added: 28 ] \| [removed: 2017] [added: 2018] Form 10-K | | |

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

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed:  31] [added:  29] |

| for the years ended (dollars in millions) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | |

| United States | $ | [removed: 18,251] [added: 21,524] | | | $ | [removed: 15,947] [added: 18,251] | | | $ | [removed: 13,561] [added: 15,947] | | | [removed: 14.4] [added: 17.9] | % | | [removed: 17.6] [added: 14.4] | % | | [removed: 14.4] [added: 17.9] | % | | [removed: 17.6] [added: 14.4] | % |

| International | [removed: 9,965] [added: 11,229] | | | | [removed: 9,691] [added: 9,965] | | | | [removed: 9,298] [added: 9,691] | | | | [removed: 2.8] [added: 12.8] | % | | [removed: 4.2] [added: 2.8] | % | | [removed: 2.1] [added: 10.4] | % | | [removed: 7.3] [added: 2.1] | % |

| Net revenues | $ | [removed: 28,216] [added: 32,753] | | | $ | [removed: 25,638] [added: 28,216] | | | $ | [removed: 22,859] [added: 25,638] | | | [removed: 10.1] [added: 16.1] | % | | [removed: 12.2] [added: 10.1] | % | | [removed: 9.8] [added: 15.2] | % | | [removed: 13.5] [added: 9.8] | % |

| [removed: 32 ] [added: 30 ] \| [removed: 2017] [added: 2018] Form 10-K | | |

| [removed: Years] [added: years] ended December 31 (dollars in millions) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | |

| United States | $ | [removed: 12,361] [added: 13,685] | | | $ | [removed: 10,432] [added: 12,361] | | | $ | [removed: 8,405] [added: 10,432] | | | [removed: 18.5] [added: 10.7] | % | | [removed: 24.1] [added: 18.5] | % | | [removed: 18.5] [added: 10.7] | % | | [removed: 24.1] [added: 18.5] | % |

| International | [removed: 6,066] [added: 6,251] | | | | [removed: 5,646] [added: 6,066] | | | | [removed: 5,607] [added: 5,646] | | | | [removed: 7.4] [added: 3.1] | % | | [removed: 0.7] [added: 7.4] | % | | [removed: 6.7] [added: 0.6] | % | | [removed: 4.3] [added: 6.7] | % |

| Total | $ | [removed: 18,427] [added: 19,936] | | | $ | [removed: 16,078] [added: 18,427] | | | $ | [removed: 14,012] [added: 16,078] | | | [removed: 14.6] [added: 8.2] | % | | [removed: 14.7] [added: 14.6] | % | | [removed: 14.4] [added: 7.4] | % | | [removed: 16.1] [added: 14.4] | % |

2018 financial results were also impacted by U.S. tax reform and the timing of the new legislation's phase in on certain subsidiaries.

| • | Hematologic oncology revenue growth from both IMBRUVICA and VENCLEXTA. |

| • | Effective management of HUMIRA international biosimilar erosion. |

| • | In July 2018, AbbVie initiated two Phase 3 clinical trials to evaluate the efficacy and safety of upadacitinib in subjects with moderate to severe atopic dermatitis. |

| • | In September 2018, AbbVie initiated a Phase 3 clinical trial to evaluate the efficacy and safety of upadacitinib in subjects with moderate to severe ulcerative colitis. |

| • | In December 2018, AbbVie submitted a New Drug Application (NDA) to the FDA and a marketing authorisation application (MAA) to the European Medicines Agency (EMA) for upadacitinib for the treatment of adult patients with moderate to severe RA. |

| • | In April 2018, AbbVie submitted a Biologics License Application (BLA) to the FDA and an MAA to the EMA for risankizumab for the treatment of plaque psoriasis in adults. |

| • | In April 2018, AbbVie initiated a Phase 3 clinical trial to evaluate the safety and efficacy of IMBRUVICA in combination with VENCLEXTA versus chlorambucil plus GAZYVA (obinutuzumab) for the first-line treatment of subjects with chronic lymphocytic leukemia (CLL)/small lymphocytic lymphoma (SLL). |

| • | In May 2018, AbbVie announced that results from the Phase 3 iLLUMINATE study evaluating IMBRUVICA in combination with GAZYVA in previously untreated CLL/SLL met its primary endpoint. In December 2018, AbbVie announced additional results from the Phase 3 iLLUMINATE study that demonstrated significantly prolonged progression-free survival (PFS). |

| • | In July 2018, AbbVie announced that results from a Phase 3 study evaluating the addition of IMBRUVICA to a chemotherapy regimen consisting of five different agents used in combination did not meet its primary endpoint in a subset of untreated diffuse large B-cell lymphoma patients identified to have the non-germinal center B-cell or activated B-cell subtypes of this disease. |

| • | In August 2018, the FDA approved IMBRUVICA, in combination with Rituxan, for the treatment of adult patients with WM. |

| • | In December 2018, AbbVie announced that results from an interim analysis of the Phase 3 ECOG1912E study evaluating IMBRUVICA in combination with Rituxan versus the chemoimmunotherapy FCR (fludarabine, cyclophosphamide and rituximab) in previously untreated and younger CLL patients met its primary endpoint. |

| • | In January 2019, AbbVie announced an update on the Phase 3 RESOLVE study evaluating IMBRUVICA in combination with nab-paclitaxel and gemcitabine versus nab-paclitaxel and gemcitabine combination in patients |

with metastatic pancreatic adenocarcinoma.

Results showed the study did not meet its primary endpoint of improving PFS or overall survival (OS) benefit among the study population.

Safety data collected from the study were consistent with the existing safety information for the study therapies.

| • | In January 2019, the FDA approved IMBRUVICA, in combination with GAZYVA, for adult patients with previously untreated CLL/SLL. |

| • | In June 2018, the FDA approved VENCLEXTA in combination with Rituxan for the treatment of patients with CLL/SLL, with or without 17p deletion, who have received at least one prior therapy. VENCLEXTA plus Rituxan is the first oral-based, chemotherapy-free combination in CLL that allows patients an option for fixed treatment duration. |

| • | In September 2018, the FDA expanded the label for VENCLEXTA in combination with Rituxan to include information about patients with previously-treated CLL who achieved minimal residual disease (MRD)-negativity in the Phase 3 MURANO trial. |

| • | In October 2018, the European Commission approved the type-II variation application for VENCLYXTO in combination with Rituxan for the treatment of patients with R/R CLL who have received at least one prior therapy. In November, AbbVie received notification from the European Commission that conditions of the original conditional marketing authorisation have been fulfilled, granting VENCLYXTO official receipt of approval. |

| • | In October 2018, AbbVie announced that the results from the Phase 3 CLL14 study comparing the efficacy and safety of VENCLEXTA plus obinutuzumab versus obinutuzumab plus chlorambucil in previously untreated patients with CLL and coexisting medical conditions met its primary endpoint. |

| • | In November 2018, the FDA granted accelerated approval for VENCLEXTA in combination with azacitidine, or decitabine, or low dose cytarabine (LDAC) for the treatment of newly-diagnosed acute myeloid leukemia (AML) in adults who are age 75 years or older, or who have comorbidities that preclude use of intensive induction chemotherapy. This indication is approved under accelerated approval based on response rates. Continued approval for this indication may be contingent upon verification and description of clinical benefit in confirmatory trials. |

| • | In March 2018, AbbVie announced top-line results from the Phase 2 TRINITY study evaluating rovalpituzumab tesirine (Rova-T) for third-line R/R small cell lung cancer (SCLC). Although Rova-T demonstrated single agent responses in advanced SCLC patients, after consulting with the FDA, based on the magnitude of effect across multiple parameters in this single-arm study, the company will not seek accelerated approval for Rova-T in third-line R/R SCLC. |

| • | In December 2018, AbbVie announced the decision to stop enrollment for the TAHOE trial, a Phase 3 study evaluating Rova-T as a second-line therapy for advanced SCLC. An Independent Data Monitoring Committee recommended stopping enrollment in TAHOE due to shorter overall survival in the Rova-T arm compared with the topotecan control arm. AbbVie will continue its ongoing Phase 3 study of Rova-T in first-line SCLC. |

| • | In November 2018, Bristol-Myers Squibb Company (BMS) announced that the FDA expanded the label for Empliciti in combination with pomalidomide and dexamethasone for the treatment of adult patients with multiple myeloma who have received at least two prior therapies. BMS and AbbVie are co-developing Empliciti, with BMS solely responsible for commercial activities. |

| • | In November 2018, AbbVie presented EXPEDITION 8 data at the Annual Meeting of the American Association for the Study of Liver Diseases (AASLD), in which 8 weeks of MAVYRET in treatment naïve, cirrhotic patients was safe and effective with no virologic failures reported. |

Neuroscience

| • | In March 2018, Biogen and AbbVie announced the voluntary worldwide withdrawal of marketing authorizations for ZINBRYTA, a prescription medicine used to treat adults with relapsing forms of multiple sclerosis. |

Other

| | |

| --- | --- |

| • | In February 2018, AbbVie announced that top-line results from the Phase 3 ELARIS UF-I study evaluating elagolix, an investigational, orally administered gonadotropin-releasing hormone (GnRH) antagonist, being investigated in combination with low-dose hormone (add-back) therapy for uterine fibroids met its primary efficacy endpoint and all ranked secondary endpoints. |

| | |

| --- | --- |

| • | In March 2018, AbbVie announced that top-line results from the Phase 3 ELARIS UF-II study evaluating elagolix in combination with low-dose hormone (add-back) therapy for uterine fibroids met its primary efficacy endpoint and all ranked secondary endpoints. |

| | |

| --- | --- |

| • | In July 2018, the FDA approved ORILISSA (elagolix) for the management of moderate to severe pain associated with endometriosis. |

| | |

| --- | --- |

These increases were partially offset by a decline in net revenues of HCV product VIEKIRA.

Diluted earnings per share in 2017 was $3.30 and included net charges related to the December 2017 enactment of the Tax Cuts and Jobs Act.

The net charges included $4.5 billion for the one-time mandatory repatriation of previously untaxed earnings of foreign subsidiaries, partially offset by after-tax benefits of $3.3 billion due to the remeasurement of net deferred tax liabilities and other related impacts.

These costs were partially offset by an after-tax benefit of $91 million due to a tax audit settlement.

In 2017, the company generated cash flows from operations of $10.0 billion, which AbbVie utilized to continue to enhance its pipeline through licensing and collaboration activities, pay cash dividends to stockholders of $4.1 billion and repurchase approximately 13 million shares for $1.0 billion in the open market.

| | | | |

| --- | --- | --- | --- |

| • | IMBRUVICA revenue growth driven by increasing market share with its eight currently approved indications in six different disease areas. |

| • | In October 2017, AbbVie announced that top-line results from three Phase 3 clinical trials evaluating risankizumab, an investigational interleukin-23 (IL-23) inhibitor, with 12-week dosing compared to ustekinumab and adalimumab met all co-primary and ranked secondary endpoints for the treatment of patients with moderate to severe chronic plaque psoriasis. The safety profile was consistent with all previously reported studies, and there were no new safety signals detected across the three studies. |

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

| • | In January 2017, the FDA approved IMBRUVICA for the treatment of patients with relapsed/refractory marginal zone lymphoma (MZL) who require systemic therapy and have received at least one prior anti-CD20-based therapy. This indication is approved under accelerated approval based on overall response rate (ORR) and continued approval may be contingent upon verification and description of clinical benefit in a confirmatory trial. MZL is a slow-growing form of non-Hodgkin's lymphoma. |

| • | In August 2017, the FDA approved IMBRUVICA for the treatment of adult patients with chronic graft-versus-host-disease (cGVHD) after failure of one or more lines of systemic therapy. IMBRUVICA is the first therapy specifically approved for adults with cGVHD, a severe and potentially life-threatening consequence of stem cell or bone marrow transplant. This marked the sixth U.S. disease indication for IMBRUVICA since the medication's initial approval in 2013 and the first approved indication outside of cancer. |

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

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

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

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

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

ABT-414

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

Veliparib

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

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

| • | In July 2017, the European Commission granted marketing authorization for MAVIRET (glecaprevir/pibrentasvir), a once-daily, ribavirin-free treatment for adults with HCV infection across all major genotypes (GT1-6). MAVIRET is also indicated for patients with specific treatment challenges, including those with compensated cirrhosis across all major genotypes, and those who previously had limited treatment options, such as patients with severe chronic kidney disease (CKD) or those with genotype 3 chronic HCV infection. |

| • | In August 2017, the FDA approved MAVYRET (glecaprevir/pibrentasvir) for the treatment of patients with chronic HCV genotype 1-6 infection without cirrhosis and with compensated cirrhosis (Child-Pugh A). MAVYRET is also |

indicated for the treatment of adult patients with HCV genotype 1 infection, who previously have been treated with a regimen containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, but not both.

MAVYRET/MAVIRET is an 8-week, pan-genotypic treatment for patients without cirrhosis and who are new to treatment.

| • | In September 2017, AbbVie submitted a New Drug Application to the FDA for elagolix, an investigational, orally administered gonadotropin-releasing hormone (GnRH) antagonist, being evaluated for the management of endometriosis with associated pain. In October, AbbVie was granted priority review for elagolix by the FDA for the management of endometriosis with associated pain. In November, AbbVie announced detailed results from two replicate Phase 3 extension studies evaluating the long-term efficacy and safety of elagolix, being evaluated for the management of endometriosis with associated pain. |

| • | In December 2017, AbbVie announced the strategic decision to close the SONAR study, a Phase 3 clinical trial evaluating the effects of the investigational compound atrasentan on progression of kidney disease in patients with stage 2 to 4 chronic kidney disease and type 2 diabetes when added to standard of care. The ongoing monitoring of renal events observed in the study revealed considerably fewer endpoints than expected at the time of analysis, which will likely affect the ability to test the SONAR study hypothesis. Therefore, AbbVie determined that it cannot justify continuing the participation of patients in the study. The decision to close the SONAR study early was not related to any safety concerns. |

| United States | $ | 338 | | | $ | 342 | | | $ | 804 | | | (1.4 | )% | | (57.4 | )% | | (1.4 | )% | | (57.4 | )% |

| International | 936 | | | | 1,180 | | | | 835 | | | | (20.6 | )% | | 41.3 | % | | (20.5 | )% | | 42.7 | % |

| Total | $ | 1,274 | | | $ | 1,522 | | | $ | 1,639 | | | (16.3 | )% | | (7.1 | )% | | (16.2 | )% | | (6.4 | )% |

| All other | $ | 998 | | | $ | 1,217 | | | $ | 1,402 | | | (18.0 | )% | | (13.2 | )% | | (18.2 | )% | | (12.3 | )% |

The sales increase in 2016 was also driven by the approval of new indications.

The sales increase in 2016 was driven by market growth across all indications, higher market share and favorable pricing.

Internationally, HUMIRA revenues increased 7% in 2017 and 4% in 2016, driven primarily by market growth across indications.

Net revenues for IMBRUVICA commenced following the completion of the Pharmacyclics acquisition on May 26, 2015.

The sales increase in 2016 was driven by market share gains following the FDA and EMA approval of IMBRUVICA as a first-line treatment for patients with CLL as well as having a full year of sales in 2016.

Global HCV sales decreased 16% in 2017 and 6% in 2016.

The sales decrease in 2017 and 2016 was a result of market contraction, lower market share and price erosion of VIEKIRA.

These factors were partially offset for 2017 by the launch of MAVYRET in certain geographies during the second half of 2017.

The following table reflects the total foreign currency forward exchange contracts outstanding at December 31, [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

| (in millions) | Contract amount | | | | Weighted average exchange rate | | | Fair and carrying value receivable/(payable) | | | | Contract amount | | | | Weighted average exchange rate | | | Fair and carrying value [removed: receivable] [added: receivable/(payable)] | | |

| Japanese yen | [removed: 940] [added: 1,076] | | | | [removed: 112.4] [added: 111.5] | | | [removed: 2] [added: (12] | | [added: )] | | [removed: 935] [added: 940] | | | | [removed: 111.6] [added: 112.4] | | | [removed: 39] [added: 2] | | |

| British pound | [removed: 760] [added: 499] | | | | [removed: 1.310] [added: 1.328] | | | [removed: (22] [added: 21] | | [removed: )] | | [removed: 611] [added: 760] | | | | [removed: 1.303] [added: 1.310] | | | [removed: 35] [added: (22] | | [added: )] |

| All other currencies | [removed: 1,877] [added: 1,776] | | | | n/a | | | [removed: (18] [added: 29] | | [removed: )] | | [removed: 1,693] [added: 1,877] | | | | n/a | | | [removed: 11] [added: (18] | | [added: )] |

| Total | $ | [removed: 9,943] [added: 10,011] | | | | | | $ | [removed: (126] [added: 106] | [removed: )] | | $ | [removed: 8,783] [added: 9,943] | | | | | | $ | [removed: 187] [added: (126] | [added: )] |

The company estimates that a 10% appreciation in the underlying currencies being hedged from their levels against the U.S. dollar, with all other variables held constant, would decrease the fair value of foreign exchange forward contracts by $1.0 billion at December 31, [removed: 2017.][added: 2018.]

The company estimates that an increase in interest rates of 100 basis points would adversely impact the fair value of AbbVie's interest rate swap contracts by approximately [removed: $509] [added: $403] million at December 31, [removed: 2017.][added: 2018.]

The company estimates that an increase of 100 basis points in long-term interest rates would decrease the fair value of long-term debt by [removed: $2.2] [added: $2.4] billion at December 31, [removed: 2017.][added: 2018.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed:  45] [added:  41] |

The company estimates that an increase in interest rates of 100 basis points would decrease the fair value of the portfolio by approximately [removed: $34] [added: $16] million as of December 31, [removed: 2017.][added: 2018.]

If the portfolio were to be liquidated, the fair value reduction would affect the [removed: income] statement [added: of earnings] in the period sold.

| | 2018 | | | | | | | | | | | 2017 | | | | | | | | | |

| Euro | $ | 6,660 | | | 1.157 | | | $ | 68 | | | $ | 6,366 | | | 1.175 | | | $ | (88 | ) |

| | 2017 | | | | | | | | | | | 2016 | | | | | | | | | |

| Euro | $ | 6,366 | | | 1.175 | | | $ | (88 | ) | | $ | 5,544 | | | 1.078 | | | $ | 102 | |

The functional currency of the company’s Venezuela operations is the U.S. dollar due to the hyperinflationary status of the Venezuelan economy.

During the first quarter of 2016, in consideration of declining economic conditions in Venezuela and a decline in transactions settled at the official rate, AbbVie determined that its net monetary assets denominated in the Venezuelan bolivar (VEF) were no longer expected to be settled at the official rate of 10 VEF per U.S. dollar, but rather at the Divisa Complementaria (DICOM) rate.

Therefore, during the first quarter of 2016, AbbVie recorded a charge of $298 million to net foreign exchange loss to revalue its bolivar-denominated net monetary assets using the DICOM rate then in effect of approximately 270 VEF per U.S. dollar.

As of December 31, 2017, AbbVie’s net monetary assets in Venezuela were insignificant.

| | | | |

| --- | --- | --- | --- |

Non-Publicly Traded Equity Securities

AbbVie holds equity securities in other pharmaceutical and biotechnology companies that are not traded on public stock exchanges.

The carrying value of these investments was $48 million as of December 31, 2017 and $42 million as of December 31, 2016.

AbbVie monitors these investments for other than temporary declines in market value and charges impairment losses to net earnings when an other than temporary decline in estimated value occurs.

In 2017 and 2016, impairment charges recorded were insignificant.

In 2015, AbbVie recorded impairment charges totaling $36 million related to certain of the company's investments in non-publicly traded equity securities.

| 46  \| 2017 Form 10-K | | |

AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's [removed: disease and multiple sclerosis;] [added: disease;] metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; [added: pain associated with endometriosis;] as well as other serious health conditions.

AbbVie also has a pipeline of promising new medicines in clinical development across such important medical specialties as immunology, oncology and [removed: neurology,] [added: neuroscience,] with additional targeted investment in cystic fibrosis and women's health.

On January 1, 2013, AbbVie became an [removed: independent] [added: independent, publicly-traded] company as a result of the distribution by Abbott Laboratories (Abbott) of 100% of the outstanding common stock of AbbVie to Abbott's shareholders.

See Note 15 to the Consolidated Financial Statements and the sales information related to [removed: HUMIRA] [added: HUMIRA, IMBRUVICA and MAVYRET] included under Item 7, "Management's Discussion and Analysis of Financial Condition and Results of [removed: Operations—Results of] Operations."

HUMIRA is sold in numerous other markets worldwide, including Japan, China, Brazil and Australia, and accounted for approximately [removed: 65%] [added: 61%] of AbbVie's total net revenues in [removed: 2017.][added: 2018.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 1 |

IMBRUVICA (ibrutinib) is [removed: a first-in-class,] [added: an] oral, once-daily therapy that inhibits a protein called Bruton's tyrosine kinase (BTK).

IMBRUVICA was one of the first medicines to receive [removed: an FDA] [added: a United States Food and Drug Administration (FDA)] approval after being granted a Breakthrough Therapy Designation and [removed: IMBRUVICA] is one of the few therapies to receive four separate designations.

VENCLEXTA (venetoclax) is [removed: approved] [added: a BCL-2 inhibitor used] to treat [removed: people] [added: adults] with CLL [added: or SLL,] with [added: or without] 17p deletion, who have received at least one prior treatment.

AbbVie's virology products address unmet needs for patients living with HCV and [removed: HIV-1.][added: HIV.]

SYNAGIS (palivizumab) is a product marketed by AbbVie outside of the United States that protects at-risk infants from severe respiratory disease caused by [removed: RSV.][added: respiratory syncytial virus (RSV).]

| 2 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

AndroGel (testosterone gel) is a testosterone replacement therapy for males diagnosed with symptomatic low testosterone due to certain underlying [removed: conditions that is available in two strengths: 1 percent and 1.62 percent.][added: conditions.]

In [removed: 2017,] [added: 2018,] three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for substantially all of AbbVie's sales in the United States.

No individual wholesaler accounted for greater than 42% of AbbVie's [removed: 2017] [added: 2018] gross revenues in the United States.

Outside the United States, [removed: sales] [added: products] are [removed: made either directly] [added: sold primarily] to customers or through distributors, depending on the market served.

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 3 |

The [removed: advent of biologics has also raised complex regulatory issues and significant pharmacoeconomic concerns because the] cost of developing and producing biologic therapies is typically dramatically higher than for conventional (small molecule) medications, and [removed: because] many [removed: expensive] biologic medications are used for ongoing treatment of chronic diseases, such as rheumatoid arthritis or inflammatory bowel disease, or for the treatment of previously untreatable cancer.

Significant investments in biologics infrastructure and manufacturing are necessary to produce biologic [removed: products, as are significant investments in marketing, distribution, and sales organization activities, which may limit the number of biosimilar competitors.][added: products.]

[removed: Ultimate approval] [added: Approval] by the FDA is dependent upon many factors, including a showing that the biosimilar is "highly similar" to the original product and has no clinically meaningful differences from the original product in terms of safety, purity and potency.

The types of data that could ordinarily be required in an application to show similarity may include analytical [removed: data] [added: data, bioequivalence studies] and studies to demonstrate chemical similarity, animal studies (including toxicity studies) and clinical studies.

AbbVie’s intellectual property is materially valuable to the [removed: company] [added: company,] and AbbVie seeks patent protection, where available, in all significant markets and/or countries for each product in development.

| 4 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

[added: Given that patents relating to pharmaceutical products are] often obtained early in the development [removed: process,] [added: process] and given the amount of time needed to complete clinical trials and other development activities required for regulatory approval, the length of time between product launch and patent expiration is significantly less than 20 years.

The extension, however, cannot exceed five years and the patent term remaining after [removed: regulatory approval cannot exceed 14 years.]

If the NDA applicant studies the product for use by children, the FDA may grant pediatric exclusivity, which extends by 180 days [removed: the longest] [added: all] existing [removed: exclusivity] [added: exclusivities] (patent [removed: or] [added: and] regulatory) related to the product.

The law provides a pathway for approval of biosimilars following the expiration of 12 years of [added: regulatory] exclusivity for the innovator biologic and a potential additional 180 day-extension term for conducting pediatric studies.

The more complex nature of biologics and biosimilar products has led to [removed: greater] [added: close] regulatory scrutiny [added: over,] and more rigorous requirements for approval [removed: of] [added: of,] follow-on biosimilar [removed: products than for small molecule generic pharmaceutical] products, which can reduce the effect of biosimilars on sales of the innovator biologic as compared to the sales erosion caused by generic versions of small molecule pharmaceutical products.

AbbVie licenses or owns a patent portfolio of thousands of patent families, each of which includes United States patent applications and/or issued [removed: patents,] [added: patents] and may also contain the non-United States counterparts to these patents and applications.

These patents and applications, including various patents that expire during the period [removed: 2018] [added: 2019] to the late 2030s, in aggregate are believed to be of material importance in the operation of AbbVie’s business.

The United States composition of matter (that is, compound) patent covering adalimumab expired in December 2016, and the equivalent European Union patent [removed: is expected to expire] [added: expired] in [added: October 2018 in] the majority of European Union [removed: countries in October 2018.][added: countries.]

In addition, the following patents, licenses, and trademarks are significant: those related to ibrutinib (which is sold under the trademark [removed: IMBRUVICA), those related to ombitasvir/paritaprevir/ritonavir and dasabuvir (which are sold under the trademarks VIEKIRA PAK, VIEKIRAX, EXVIERA,] [added: IMBRUVICA)] and [removed: HOLKIRA PAK),] those related to glecaprevir and pibrentasvir (which are sold under the trademarks MAVYRET and [removed: MAVIRET), and those related to testosterone (which is sold under the trademark AndroGel).][added: MAVIRET).]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 5 |

In addition to its independent efforts to develop and market products, AbbVie enters into arrangements such as licensing arrangements, [added: option-to-license arrangements,] strategic alliances, co-promotion arrangements, co-development and co-marketing agreements, and joint ventures.

These licensing and other arrangements typically include, among other terms and conditions, non-refundable upfront license fees, [added: option fees and option exercise payments (if applicable),] milestone payments and royalty and/or profit sharing obligations.

| 6 [removed: ] [added: ] \| [removed: 2017] [added: 2018] Form 10-K | | |

Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and certain changes to the manufacturing procedures and finished product must be included in the NDA or [removed: BLA,] [added: BLA] and approved by the [removed: FDA.][added: FDA prior to implementation.]

In addition, as a condition of approval, the FDA may require post-marketing testing and surveillance to further assess and monitor the product's safety or efficacy after commercialization, which may require additional clinical [removed: trials or] [added: trials,] patient registries, [added: observational data] or additional work on chemistry, manufacturing and controls.

AbbVie is subject to similar regulatory requirements outside the United [removed: States.][added: States for approval and marketing of pharmaceutical products.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed: ] [added: ] 7 |

In addition, VENCLEXTA is used in combination with azacitidine, or decitabine, or low-dose cytarabine to treat adults with newly-diagnosed acute myeloid leukemia (AML) who are 75 years of age or older or have other medical conditions that prevent the use of standard chemotherapy.

ORILISSA.

ORILISSA (elagolix) is the first and only orally-administered, nonpeptide small molecule gonadotropin-releasing hormone (GnRH) antagonist specifically developed for women with moderate to severe endometriosis pain.

The FDA approved ORILISSA under priority review.

It represents the first FDA-approved oral treatment for the management of moderate to severe pain associated with endometriosis in over a decade.

ORILISSA inhibits endogenous GnRH signaling by binding competitively to GnRH receptors in the pituitary gland.

Administration results in dose-dependent suppression of luteinizing hormone and follicle-stimulating hormone, leading to decreased blood concentrations of ovarian sex hormones, estradiol and progesterone.

Sevoflurane.

HUMIRA is now facing direct biosimilar competition in Europe and other countries, which represent approximately 75% of AbbVie's international HUMIRA business or approximately 25% of total global HUMIRA revenues.

regulatory approval cannot exceed 14 years.

AbbVie's operations are also affected by trade regulations in many countries that limit the import of raw

Similar reporting requirements have also been enacted on the state level in the United States, and an increasing number of

Many governments are also following a similar path for biosimilar therapies.

AbbVie continues to work on HUMIRA formulation and delivery enhancements to improve convenience and the overall patient experience.

VENCLEXTA is the first FDA-approved treatment that targets the B-cell lymphoma 2 (BCL-2) protein, which supports cancer cell growth and is overexpressed in many patients with CLL.

VENCLEXTA has been approved in the EU for the treatment of CLL in patients with 17p deletion or TP53 mutation and are unsuitable for or have failed a B-cell receptor pathway inhibitor and for the treatment of CLL in absence of 17p deletion or TP53 mutation who have failed both chemoimmunotherapy and a B-cell receptor pathway inhibitor.

Anesthesia products.

ZINBRYTA.

ZINBRYTA (daclizumab) is a once-monthly, self-administered, subcutaneous treatment for relapsing forms of multiple sclerosis (MS), which was approved by the FDA in May 2016 and by the European Commission in July 2016.

Due to the risk of serious liver damage, the use of ZINBRYTA is restricted to adult patients with relapsing forms of MS who have had an inadequate response to at least two disease modifying therapies (DMTs) and for whom treatment with any other DMT is contraindicated or otherwise unsuitable.

This added complexity is due to steps needed to ensure that the safety and efficacy of biosimilars is highly similar to that of an original biologic, such as HUMIRA.

The law also requires that the biosimilar must be for a condition of use approved for the original biologic and that the manufacturing facility meets the standards necessary to assure that the biosimilar is safe, pure and potent.

In the European Union, while a pathway for the approval of biosimilars has existed since 2005, the products that have come to market to date have had a mixed impact on the market share of incumbent products, with significant variation by product.

Other Competitive Products.

Although a number of competitive biologic branded products have been approved since HUMIRA was first introduced in 2003, most have gained only a modest share of the worldwide market.

Given that patents relating to pharmaceutical products are

The United States

composition of matter patents covering ombitasvir, paritaprevir and dasabuvir are expected to expire in 2032, 2031 and 2029, respectively.

AbbVie spent approximately $5.0 billion in 2017, $4.4 billion in 2016 and $4.3 billion in 2015 on research to discover and develop new products, indications and processes and to improve existing products and processes.

These expenses consisted primarily of salaries and related expenses for personnel, license fees, consulting payments, contract research, clinical drug supply manufacturing, the costs of laboratory equipment and facilities, clinical trial costs and collaboration fees and expenses.

Medicare or Medicaid and has implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing home and home health settings.

AbbVie is subject to a Corporate Integrity Agreement (CIA) entered into by Abbott on May 7, 2012 that requires enhancements to AbbVie's compliance program and contains reporting obligations, including disclosure of financial payments to doctors.

If AbbVie fails to comply with the CIA, the Office of Inspector General for the United States Department of Health and Human Services may impose monetary penalties or exclude AbbVie from federal health care programs, including Medicare and Medicaid.

Certain additional risks are inherent in conducting business outside the United

| For the fiscal year ended December 31, [removed: 2017] [added: 2018] | | |

[removed: ][added: ]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

| Large Accelerated Filer x | | Accelerated Filer o | | Non-accelerated Filer o [removed: (Do not check if a smaller reporting company)] |

The aggregate market value of the [removed: 1,577,814,696] [added: 1,498,817,459] shares of voting stock held by non-affiliates of the registrant, computed by reference to the closing price as reported on the New York Stock Exchange, as of the last business day of AbbVie Inc.'s most recently completed second fiscal quarter (June 30, [removed: 2017),] [added: 2018),] was [removed: $114,407,343,607.][added: $138,865,437,576.]

Portions of the [removed: 2018] [added: 2019] AbbVie Inc. Proxy Statement are incorporated by reference into Part III.

The Definitive Proxy Statement will be filed on or about March [removed: 19, 2018.][added: 22, 2019.]

FOR THE YEAR ENDED DECEMBER 31, [removed: 2017][added: 2018]

| Item 1. | [removed: [BUSINESS](#s877E2C443C2B5CD3BC8B810DF3B24FCE)] [added: [BUSINESS](#sF1227EA780A651FDBEFF6402264B224F)] | [removed: [1](#s877E2C443C2B5CD3BC8B810DF3B24FCE)] [added: [1](#sF1227EA780A651FDBEFF6402264B224F)] |

| Item 1A. | [RISK [removed: FACTORS](#s34F220B25122594F9D9F2D2AABDDE0E5)] [added: FACTORS](#sC6A3B0BAB29253B2807E5CC3F72250FE)] | [removed: [10](#s34F220B25122594F9D9F2D2AABDDE0E5)] [added: [10](#sC6A3B0BAB29253B2807E5CC3F72250FE)] |

| Item 1B. | [UNRESOLVED STAFF [removed: COMMENTS](#s7276635AFF595BBEBDAE34BC5749494A)] [added: COMMENTS](#s5C10E6E151A3583EB8C59C6F0A5969A2)] | [removed: [20](#s7276635AFF595BBEBDAE34BC5749494A)] [added: [19](#s5C10E6E151A3583EB8C59C6F0A5969A2)] |

| Item 2. | [removed: [PROPERTIES](#sB7565B55E5155C09B51555B924D02308)] [added: [PROPERTIES](#sDF9654B70E8E5B8288C82C858258B8BE)] | [removed: [20](#sB7565B55E5155C09B51555B924D02308)] [added: [19](#sDF9654B70E8E5B8288C82C858258B8BE)] |

| Item 3. | [LEGAL [removed: PROCEEDINGS](#s9EE1D76DD042563CAE5489474772E852)] [added: PROCEEDINGS](#s90954B5165295721A77216184C0F0181)] | [removed: [21](#s9EE1D76DD042563CAE5489474772E852)] [added: [20](#s90954B5165295721A77216184C0F0181)] |

| Item 4. | [MINE SAFETY [removed: DISCLOSURES](#s9F2521EC81F656E9A0476773E65233E7)] [added: DISCLOSURES](#sFD0D632700A459779A6746190A363F90)] | [removed: [21](#s9F2521EC81F656E9A0476773E65233E7)] [added: [20](#sFD0D632700A459779A6746190A363F90)] |

| | [EXECUTIVE OFFICERS OF THE [removed: REGISTRANT](#sE0D02BE674C35E7B96FAAF25F48AEDB3)] [added: REGISTRANT](#s5486FFA5844E589E89B7DEC0EF9AF3A9)] | [removed: [22](#sE0D02BE674C35E7B96FAAF25F48AEDB3)] [added: [21](#s5486FFA5844E589E89B7DEC0EF9AF3A9)] |

| Item 5. | [MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY [removed: SECURITIES](#s55ADFD65EEBF5105B89D17A08A142E5C)] [added: SECURITIES](#sC710CEF9D05F5F7DA40FB449D2DC16EA)] | [removed: [24](#s55ADFD65EEBF5105B89D17A08A142E5C)] [added: [23](#sC710CEF9D05F5F7DA40FB449D2DC16EA)] |

| Item 6. | [SELECTED FINANCIAL [removed: DATA](#s9ED0AA38548B563B9D7780711111E066)] [added: DATA](#sA8A36F3AF78F5F988DCBB6506F9F6438)] | [removed: [27](#s9ED0AA38548B563B9D7780711111E066)] [added: [25](#sA8A36F3AF78F5F988DCBB6506F9F6438)] |

| Item 7. | [MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF [removed: OPERATIONS](#s46C4371D15F154B397E27438A1A7FF52)] [added: OPERATIONS](#s5A7A5468FD435DA79D3512C4B961A4EA)] | [removed: [28](#s46C4371D15F154B397E27438A1A7FF52)] [added: [26](#s5A7A5468FD435DA79D3512C4B961A4EA)] |

| Item 7A. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET [removed: RISK](#s02E6080FFC1F53F8A1C178D9F7A606F9)] [added: RISK](#s45400DEFF7585A0B84D0FA90D37E22CA)] | [removed: [45](#s02E6080FFC1F53F8A1C178D9F7A606F9)] [added: [41](#s45400DEFF7585A0B84D0FA90D37E22CA)] |

| Item 8. | [FINANCIAL STATEMENTS AND SUPPLEMENTARY [removed: DATA](#sF5A4B173116E5CFB86B3FA3F196AAE7B)] [added: DATA](#s34F90B471E8D5D7C9D8811B7213ED33A)] | [removed: [47](#sF5A4B173116E5CFB86B3FA3F196AAE7B)] [added: [42](#s34F90B471E8D5D7C9D8811B7213ED33A)] |

| Item 9. | [CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL [removed: DISCLOSURE](#sC62BEBCBF18B5251890EEA6F8CECFA71)] [added: DISCLOSURE](#s1FCADB9452145B539151BA7467B4A718)] | [removed: [95](#sC62BEBCBF18B5251890EEA6F8CECFA71)] [added: [89](#s1FCADB9452145B539151BA7467B4A718)] |

| Item 9A. | [CONTROLS AND [removed: PROCEDURES](#s7EB5CDF7A1015198B66814ED95649F8C)] [added: PROCEDURES](#s0856457CD20853F191B392515C2E69F5)] | [removed: [95](#s7EB5CDF7A1015198B66814ED95649F8C)] [added: [89](#s0856457CD20853F191B392515C2E69F5)] |

| Item 9B. | [OTHER [removed: INFORMATION](#sF0CF3A6627AD5C55BE986FA632AC49BC)] [added: INFORMATION](#s23427E6D76345BCF87906FD5FBA98BD0)] | [removed: [98](#sF0CF3A6627AD5C55BE986FA632AC49BC)] [added: [92](#s23427E6D76345BCF87906FD5FBA98BD0)] |

| [PART [removed: III](#s7DBD07799C9E5CE493DFAB04337B044C)] [added: III](#sEAAB7F3C5A6C508498E8C88545ACAEE1)] | | |

| Item 10. | [DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE [removed: GOVERNANCE](#s8812A5D9411F57FA9D2C496C68A74CA2)] [added: GOVERNANCE](#sDB50751E46CF53F1969FD34A17924148)] | [removed: [99](#s8812A5D9411F57FA9D2C496C68A74CA2)] [added: [93](#sDB50751E46CF53F1969FD34A17924148)] |

| Item 11. | [EXECUTIVE [removed: COMPENSATION](#s21C220D28E425E5096D5E6713FA3EE70)] [added: COMPENSATION](#s29CE66FCD1C85921B236980A91400CFA)] | [removed: [99](#s21C220D28E425E5096D5E6713FA3EE70)] [added: [93](#s29CE66FCD1C85921B236980A91400CFA)] |

| Item 12. | [SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER [removed: MATTERS](#s5F80EB6F580B524BB92C74EFA77F87BD)] [added: MATTERS](#s98B78926A4CE5380A80E942AD12171D0)] | [removed: [100](#s5F80EB6F580B524BB92C74EFA77F87BD)] [added: [94](#s98B78926A4CE5380A80E942AD12171D0)] |

| Item 13. | [CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR [removed: INDEPENDENCE](#s092CEF1070FF586FA95D0B34F98C996C)] [added: INDEPENDENCE](#s847D68FA372E54E18490A5200FE3305E)] | [removed: [100](#s092CEF1070FF586FA95D0B34F98C996C)] [added: [94](#s847D68FA372E54E18490A5200FE3305E)] |

| Item 14. | [PRINCIPAL ACCOUNTING FEES AND [removed: SERVICES](#sCF5AE1AB9C7C5CDCB3CA6B05142464EE)] [added: SERVICES](#s3AB358727B6F511AAC82D5C19D00FBEA)] | [removed: [100](#sCF5AE1AB9C7C5CDCB3CA6B05142464EE)] [added: [94](#s3AB358727B6F511AAC82D5C19D00FBEA)] |

| Item 15. | [EXHIBITS, FINANCIAL STATEMENT [removed: SCHEDULES](#s68AE73AB0C6C570A988BFEA388412DC7)] [added: SCHEDULES](#s770566CA94CF54BAA5350B38723E74A1)] | [removed: [101](#s68AE73AB0C6C570A988BFEA388412DC7)] [added: [95](#s770566CA94CF54BAA5350B38723E74A1)] |

| Item 16. | [FORM 10-K [removed: SUMMARY](#s6f5b97a11ad3457088f3d89580b86bca)] [added: SUMMARY](#sF9237B687F5A5E97A61D74B8A016719B)] | [removed: [105](#s6f5b97a11ad3457088f3d89580b86bca)] [added: [99](#sF9237B687F5A5E97A61D74B8A016719B)] |

10-K 1 abbv-20181231x10k.htm 10-K

Number of common shares outstanding as of February 8, 2019: 1,475,083,514

| [PART I](#sD856D38DAB43575D9B1C10440B543DCA) | | |

| [PART II](#s686B47EE396E5B92806A10150D4D94F2) | | |

| [PART IV](#s21C1EDC8883B5AF89BBDFFA08E9B7A75) | | |

| | [SIGNATURES](#s6391FF5887265C0FB0C9A246BDE8803A) | [100](#s6391FF5887265C0FB0C9A246BDE8803A) |

10-K 1 abbv-20171231x10k.htm 10-K

Number of common shares outstanding as of February 2, 2018: 1,587,972,655

| [PART I](#s5320712042A35E8D915DC94858644839) | | |

| [PART II](#sB388139A74BC584286B6EDA16D6F6440) | | |

| [PART IV](#s3806755B3A0F579B8C63F7A46826441B) | | |

| | [SIGNATURES](#sAFEFB50030105984B7EBC6D53D5FA07E) | [106](#sAFEFB50030105984B7EBC6D53D5FA07E) |

| [removed: 20  \| 2017 Form 10-K] | | [added: 2018 Form 10-K \|  19] |

| [removed: | | 2017] [added: 20  \| 2018] Form 10-K [removed: \|  21] | [added: | |]

| Richard A. Gonzalez | | [removed: 64] [added: 65] | | Chairman of the Board and Chief Executive Officer |

[removed: | Carlos Alban | | 55 | |] [added: He previously served as] Executive Vice President, Commercial Operations [removed: |][added: from 2013 to 2018.]

[removed: | William J. Chase | | 50 | |] [added: He previously served as] Executive Vice President, Chief Financial Officer [removed: |][added: from 2013 to 2018.]

| Henry O. Gosebruch* | | [removed: 45] [added: 46] | | Executive Vice President and Chief Strategy Officer |

[removed: | Laura J.] [added: Prior to AbbVie’s separation from Abbott, Ms.] Schumacher [removed: | | 54 | |] [added: served as] Executive Vice President, [removed: External Affairs,] General Counsel and Corporate Secretary [removed: |][added: from 2007 to 2012.]

[removed: | Michael E. Severino, M.D.* | | 52 | |] [added: He served as] Executive Vice President, Research and Development and Chief Scientific Officer [removed: |][added: from 2014 to 2018.]

| Timothy J. Richmond | | [removed: 51] [added: 52] | | [removed: Senior] [added: Executive] Vice President, [added: Chief] Human Resources [added: Officer] |

| Azita Saleki-Gerhardt, Ph.D. | | [removed: 54] [added: 55] | | [removed: Senior] [added: Executive] Vice President, Operations |

| Robert A. Michael* | | [removed: 47] [added: 48] | | [added: Senior] Vice President, [removed: Controller] [added: Chief Financial Officer] |

| * | [added: Dr. Severino was first appointed as a corporate officer in June 2014;] Mr. Gosebruch was first appointed as a corporate officer in December 2015; Dr. [removed: Severino] [added: Donoghoe] was first appointed as a corporate officer in [removed: June 2014; and] [added: January 2019;] Mr. Michael was first appointed as a corporate officer in December [removed: 2015.] [added: 2015; Mr. Stewart was first appointed as a corporate officer in December 2018; and Mr. Durkin was first appointed as a corporate officer in October 2018.] |

Mr. [removed: Alban] [added: Stewart] is [removed: AbbVie's Executive] [added: AbbVie’s Senior] Vice President, [added: U.S.] Commercial Operations.

Mr. [removed: Chase] [added: Michael] is [removed: AbbVie's Executive] [added: AbbVie’s Senior] Vice President, Chief Financial Officer.

Ms. Schumacher is [removed: AbbVie's Executive] [added: AbbVie’s] Vice [removed: President,] [added: Chairman,] External [removed: Affairs, General Counsel] [added: Affairs] and [removed: Corporate Secretary,] [added: Chief Legal Officer,] responsible for [removed: AbbVie's] [added: legal, ethics and compliance, corporate governance, corporate aviation, and all] externally-facing functions [removed: of Health Economics Outcomes Research, Government Affairs, Corporate Responsibility, Brand] [added: including health economics outcomes research, government affairs, corporate responsibility, brand] and [removed: Communications.][added: communications.]

| [removed: 22  \| 2017 Form 10-K] | | [added: 2018 Form 10-K \|  21] |

Mr. Richmond is [removed: AbbVie's Senior] [added: AbbVie’s Executive] Vice President, [added: Chief] Human [removed: Resources.][added: Resources Officer.]

[removed: He] [added: Mr. Richmond] served as [removed: Abbott's] [added: Abbott’s] Divisional Vice President of Compensation & Benefits from 2008 to 2012, as Group Vice President of Talent and Rewards from 2007 to 2008, and as Divisional Vice President of Talent Acquisition from 2006 to 2007.

Dr. Saleki-Gerhardt is [removed: AbbVie's Senior] [added: AbbVie’s Executive] Vice President, Operations.

[removed: She] [added: Dr. Saleki-Gerhardt] served as [removed: Abbott's] [added: Abbott’s] Vice President, Pharmaceuticals Manufacturing and Supply from 2011 to 2012, and as Divisional Vice President, Quality Assurance, Global Pharmaceutical Operations from 2008 to 2011.

| [removed: | | 2017] [added: 22  \| 2018] Form 10-K [removed: \|  23] | [added: | |]

| Carlos Alban | | 56 | | Vice Chairman, Chief Commercial Officer |

| Laura J. Schumacher | | 55 | | Vice Chairman, External Affairs and Chief Legal Officer |

| Michael E. Severino, M.D.* | | 53 | | Vice Chairman and President |

| William J. Chase | | 51 | | Executive Vice President, Finance and Administration |

| Nicholas Donoghoe, M.D.* | | 38 | | Senior Vice President, Enterprise Innovation |

| Jeffrey R. Stewart* | | 50 | | Senior Vice President, U.S. Commercial Operations |

| Brian L. Durkin* | | 58 | | Vice President, Controller |

Mr. Gonzalez joined Abbott in 1977 and held various management positions.

Mr. Alban is AbbVie’s Vice Chairman, Chief Commercial Officer, responsible for global commercial operations of the company, including the Pharmacyclics commercial functions.

Prior to her current appointment in 2018, she served as AbbVie’s Executive Vice President, External Affairs, General Counsel and Corporate Secretary.

Dr. Severino is AbbVie’s Vice Chairman and President, responsible for research and development, human resources, operations, and the corporate strategy office.

Mr. Chase is AbbVie’s Executive Vice President, Finance and Administration, responsible for all financial and administrative functions of the company.

He served as Senior Vice President, Human Resources from 2013 to 2018.

She served as Senior Vice President, Operations from 2013 to 2018.

She serves on the board of Entegris Inc.

Dr. Donoghoe is AbbVie's Senior Vice President, Enterprise Innovation.

He previously served as a Partner at McKinsey & Company, leading the firm's West Coast pharma and biotechnology practice.

Dr. Donoghoe joined the firm in 2007 and supported multiple successful launches in therapeutic areas such as oncology, immunology, and primary care.

He joined AbbVie in 2019.

Mr. Michael previously served as Vice President, Controller from March 2017 to October 2018.

Mr. Stewart previously served as AbbVie’s President, Commercial Operations from 2013 to 2018.

Prior to AbbVie’s separation from Abbott, he served as Vice President, Abbott Proprietary Pharmaceutical Division, United States.

Mr. Stewart joined Abbott in 1992.

Mr. Durkin is AbbVie’s Vice President, Controller.

Mr. Durkin previously served as Vice President, Internal Audit from 2016 to 2018.

Prior to joining AbbVie, he served as Vice President of Finance and Division Controller for Abbott’s Vision Care business from 2009 to 2016 and Controller Pharmaceutical Research and Development from 2005 to 2009.

Mr. Durkin joined Abbott in 1986.

Mr. Gonzalez joined Abbott in 1977 and held various management positions before briefly retiring in 2007, including: Abbott’s President and Chief Operating Officer; President, Chief Operating Officer of Abbott’s Medical Products Group; Senior Vice President and President of Abbott’s former Hospital Products Division; Vice President and President of Abbott’s Health Systems Division; and Divisional Vice President and General Manager for Abbott’s Diagnostics Operations in the United States and Canada.

She also leads AbbVie's legal functions.

Prior to AbbVie's separation from Abbott, Ms. Schumacher served as Executive Vice President, General Counsel and Corporate Secretary from 2007 to 2012, and as Senior Vice President, Corporate Secretary and General Counsel from 2005 to 2007.

Dr. Severino is AbbVie's Executive Vice President, Research and Development and Chief Scientific Officer.

Mr. Michael has been Vice President, Controller, since March 1, 2017.

The principal market for AbbVie's common stock is the New York Stock Exchange [removed: (NYSE).][added: (Symbol: ABBV).]

There were [removed: 50,095] [added: 48,516] stockholders of record of AbbVie common stock as of January 31, [removed: 2018.][added: 2019.]

On [removed: October 27, 2017,] [added: November 2, 2018,] AbbVie's board of directors declared an increase in the quarterly cash dividend from [removed: $0.64] [added: $0.96] per share to [removed: $0.71] [added: $1.07] per share, payable on February 15, [removed: 2018] [added: 2019] to stockholders of record as of January [removed: 12, 2018.][added: 15, 2019.]

The following graph compares the cumulative total returns of AbbVie, the S&P 500 Index and the NYSE Arca Pharmaceuticals [removed: Index.][added: Index for the period from December 31, 2013 through December 31, 2018.]

This graph assumes $100 was invested in AbbVie common stock and each index on [removed: January 2,] [added: December 31,] 2013 and also assumes the reinvestment of dividends.

| [removed: 24  \| 2017 Form 10-K] | | [added: 2018 Form 10-K \|  23] |

[removed: ][added: ]

| Period | (a) Total Number of Shares (or Units) Purchased | | | (b) Average Price Paid per Share (or Unit) | | | | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | | | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | | | [added: |]

| 1. | In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares [added: also] included the shares [removed: deemed surrendered to AbbVie to pay] [added: purchased on] the [removed: exercise price in connection with] [added: open market for] the [removed: exercise] [added: benefit] of [removed: employee stock options – 4,552 in October; 1,855 in November; and 5,368] [added: participants] in [removed: December, with average exercise prices of $95.96] [added: the AbbVie Employee Stock Purchase Plan – 4,246] in October; [removed: $93.36] [added: 1,331] in November; and [removed: $97.33] [added: 13,443] in December. |

| [removed: | | 2017] [added: 24  \| 2018] Form 10-K [removed: \|  25] | [added: | |]

[added: | 2. | On December 13, 2018, AbbVie's board of directors authorized a $5.0 billion increase to the existing stock repurchase program.] The [removed: new] [added: company's] stock repurchase [removed: program] [added: authorization] permits purchases of AbbVie shares from time to time in open-market or private [removed: transactions, including accelerated share repurchases,] [added: transactions] at management’s discretion. [added: The program has no time limit and can be discontinued at any time. |]

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| October 1, 2018 - October 31, 2018 | 4,246 | | (1) | $ | 88.24 | | (1) | — | | | $ | 1,500,000,050 | | |

| November 1, 2018 - November 30, 2018 | 17,119,956 | | (1) | $ | 87.62 | | (1) | 17,118,625 | | | $ | 8,924 | | |

| December 1, 2018 - December 31, 2018 | 8,546,698 | | (1) | $ | 87.89 | | (1) | 8,533,255 | | | $ | 4,250,016,122 | | (2) |

| Total | 25,670,900 | | (1) | $ | 87.71 | | (1) | 25,651,880 | | | $ | 4,250,016,122 | | (2) |

| | |

| --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | Market Price Per Share | | | | |

| | 2017 | | | 2016 | |

| | High | Low | | High | Low |

| First Quarter | $66.79 | $59.27 | | $59.81 | $50.71 |

| Second Quarter | $73.67 | $63.12 | | $65.37 | $56.36 |

| Third Quarter | $90.95 | $69.38 | | $68.12 | $61.77 |

| Fourth Quarter | $99.10 | $85.24 | | $65.05 | $55.06 |

The following table summarizes quarterly cash dividends declared for the years ended December 31, 2017 and 2016:

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| 2017 | | | | | | 2016 | | | | |

| Date Declared | | Payment Date | | Dividend Per Share | | Date Declared | | Payment Date | | Dividend Per Share |

| 10/27/17 | | 02/15/18 | | $0.71 | | 10/28/16 | | 02/15/17 | | $0.64 |

| 09/08/17 | | 11/15/17 | | $0.64 | | 09/09/16 | | 11/15/16 | | $0.57 |

| 06/22/17 | | 08/15/17 | | $0.64 | | 06/16/16 | | 08/15/16 | | $0.57 |

| 02/16/17 | | 05/15/17 | | $0.64 | | 02/18/16 | | 05/16/16 | | $0.57 |

This graph covers the period from January 2, 2013 (the first day AbbVie's common stock began "regular-way" trading on the NYSE) through December 31, 2017.

| | | | |

| --- | --- | --- | --- |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1, 2017 - October 31, 2017 | 8,469 | | (1) | $ | 94.35 | | | — | | | $ | 4,536,288,945 | |

| November 1, 2017 - November 30, 2017 | 5,279,237 | | (1) | $ | 94.76 | | | 5,276,274 | | | $ | 4,036,289,077 | |

| December 1, 2017 - December 31, 2017 | 20,588 | | (1) | $ | 97.85 | | | — | | | $ | 4,036,289,077 | |

| Total | 5,308,294 | | (1) | 94.77 | | | | 5,276,274 | | | $ | 4,036,289,077 | |

These shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – 3,917 in October; 1,108 in November; and 15,220 in December.

On February 15, 2018, AbbVie's board of directors authorized a new $10.0 billion stock repurchase program, which superseded AbbVie's previous stock repurchase program.

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

| 26  \| 2017 Form 10-K | | |

| as of and for the years ended December 31 (in millions, except per share data) | [removed: 2017 |] [added: 2018] | | | [removed: 2016] | [added: 2017] | | | [removed: 2015] | [added: 2016] | | | [removed: 2014] | [added: 2015] | | | [removed: 2013] | [added: 2014] | | |

| Statement of earnings data | | | | | | | | | | | | | | | | | | | | [removed: |]

| Net revenues | $ | [removed: 28,216] [added: 32,753] | | | $ | [removed: 25,638] [added: 28,216] | | | $ | [removed: 22,859] [added: 25,638] | | | $ | [removed: 19,960] [added: 22,859] | | | $ | [removed: 18,790 |] [added: 19,960] | |

| Net earnings | [removed: 5,309 |] [added: 5,687] | | | [removed: 5,953] | [added: 5,309] | | | [removed: 5,144] | [added: 5,953] | | | [removed: 1,774] | [added: 5,144] | | | [removed: 4,128] | [added: 1,774] | | |

| Basic earnings per share | $ | [removed: 3.31] [added: 3.67] | | | $ | [removed: 3.65] [added: 3.31] | | | $ | [removed: 3.15] [added: 3.65] | | | $ | [removed: 1.11] [added: 3.15] | | | $ | [removed: 2.58 |] [added: 1.11] | |

| Diluted earnings per share | $ | [removed: 3.30] [added: 3.66] | | | $ | [removed: 3.63] [added: 3.30] | | | $ | [removed: 3.13] [added: 3.63] | | | $ | [removed: 1.10] [added: 3.13] | | | $ | [removed: 2.56 |] [added: 1.10] | |

| Cash dividends declared per common share | $ | [removed: 2.63] [added: 3.95] | | | $ | [removed: 2.35] [added: 2.63] | | | $ | [removed: 2.10] [added: 2.35] | | | $ | [removed: 1.75] [added: 2.10] | | | $ | [removed: 2.00 |] [added: 1.75] | [removed: (a)] |

| Weighted-average basic shares outstanding | [removed: 1,596 |] [added: 1,541] | | | [removed: 1,622] | [added: 1,596] | | | [removed: 1,625] | [added: 1,622] | | | [removed: 1,595] | [added: 1,625] | | | [removed: 1,589] | [added: 1,595] | | |

| Weighted-average diluted shares outstanding | [removed: 1,603 |] [added: 1,546] | | | [removed: 1,631] | [added: 1,603] | | | [removed: 1,637] | [added: 1,631] | | | [removed: 1,610] | [added: 1,637] | | | [removed: 1,604] | [added: 1,610] | | |

| Balance sheet data | | | | | | | | | | | | | | | | | | | | [removed: |]

| Total assets [removed: (b)(c)] [added: (a)(b)] | $ | [removed: 70,786] [added: 59,352] | | | $ | [removed: 66,099] [added: 70,786] | | | $ | [removed: 53,050] [added: 66,099] | | | $ | [removed: 27,513] [added: 53,050] | | | $ | [removed: 29,241 |] [added: 27,513] | |

| Long-term debt and lease obligations [removed: (b)(c)(d) | 36,968] [added: (a)(b)(c)] | [added: 36,611] | | | [removed: 36,465] | [added: 36,968] | | | [removed: 31,265] | [added: 36,465] | | | [removed: 14,552] | [added: 31,265] | | | [removed: 14,353] | [added: 14,552] | | |

| [removed: (b)] [added: (a)] | In May 2015, AbbVie acquired Pharmacyclics for approximately $20.8 billion, including cash consideration of $12.4 billion and equity consideration of approximately 128 million shares of AbbVie common stock valued at $8.4 billion. In connection with the acquisition, AbbVie issued $16.7 billion aggregate principal amount of unsecured senior notes, of which approximately $11.5 billion was used to finance the acquisition and approximately $5.0 billion was used to finance an accelerated share repurchase (ASR) program. [removed: See Note 5 to the Consolidated Financial Statements for information regarding the acquisition of Pharmacyclics, Note 9 for information on the senior notes and Note 12 for information on the ASR.] |

| [removed: (c)] [added: (b)] | In June 2016, AbbVie acquired Stemcentrx for approximately $6.4 billion, including cash consideration of $1.9 billion, equity consideration of approximately 62.4 million shares of AbbVie common stock valued at $3.9 billion and contingent consideration of approximately $620 million. In connection with the acquisition, AbbVie issued $7.8 billion aggregate principal amount of unsecured senior notes. Of the $7.7 billion net proceeds, approximately $1.9 billion was used to finance the acquisition, approximately $3.8 billion was used to finance an ASR and approximately $2.0 billion was used to repay the company's outstanding term loan that was due to mature in November 2016. See Note 5 to the Consolidated Financial Statements for information regarding the acquisition of Stemcentrx, Note 9 for information on the senior notes and Note 12 for information on the ASR. |

| [removed: (d)] [added: (c)] | Includes current portion of both long-term debt and lease obligations. |

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed:  27] [added:  25] |

| | | | | | | | | | | | | | | | | | | | |

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| | |

| --- | --- |

| (a) | AbbVie declared regular quarterly cash dividends in 2013 aggregating $1.60 per share of common stock. In addition, a cash dividend of $0.40 per share of common stock was declared from pre-separation earnings on January 4, 2013 and was recorded as a reduction of additional paid-in capital. |

| [Consolidated Statements of [removed: Earnings](#sAF47F3A9B761543C9E948092542317A0)] [added: Earnings](#s76C37AFEFB475716AF8B22B34D33E4D9)] | [removed: [48](#sAF47F3A9B761543C9E948092542317A0)] [added: [43](#s76C37AFEFB475716AF8B22B34D33E4D9)] |

| [Consolidated Statements of Comprehensive [removed: Income](#s6240A53B78715348BEDD0B9CF7BFE6D7)] [added: Income](#s7145A93ACD9B59E2B0F6715D41534619)] | [removed: [49](#s6240A53B78715348BEDD0B9CF7BFE6D7)] [added: [44](#s7145A93ACD9B59E2B0F6715D41534619)] |

| [Consolidated Balance [removed: Sheets](#sA1876386E2FD5A6A847557497FC34CD2)] [added: Sheets](#s71E05AF9910356549D8668CC72F6EF17)] | [removed: [50](#sA1876386E2FD5A6A847557497FC34CD2)] [added: [45](#s71E05AF9910356549D8668CC72F6EF17)] |

| [Consolidated Statements of [removed: Equity](#s585FD98A119559AC9F5DEFC362403DD4)] [added: Equity](#s8F4A1D5A184355D68F80E6670C37FE68)] | [removed: [51](#s585FD98A119559AC9F5DEFC362403DD4)] [added: [46](#s8F4A1D5A184355D68F80E6670C37FE68)] |

| [Consolidated Statements of Cash [removed: Flows](#sC01591804EC052A789423D6C8B54BF3F)] [added: Flows](#s697E68C309115EA9BE6BB031F1500623)] | [removed: [52](#sC01591804EC052A789423D6C8B54BF3F)] [added: [47](#s697E68C309115EA9BE6BB031F1500623)] |

| [Notes to Consolidated Financial [removed: Statements](#s02ED5EB5715355EF826D5295727C861F)] [added: Statements](#s7ED162C621ED5E378EF1E810D4EB20AD)] | [removed: [53](#s02ED5EB5715355EF826D5295727C861F)] [added: [48](#s7ED162C621ED5E378EF1E810D4EB20AD)] |

| [Report of Independent Registered Public Accounting [removed: Firm](#sDF526C82EED156E9BE1E543973C948AF)] [added: Firm](#s8F5B70D79A175A72A81BF955B6B04109)] | [removed: [94](#sDF526C82EED156E9BE1E543973C948AF)] [added: [88](#s8F5B70D79A175A72A81BF955B6B04109)] |

| [removed: | | 2017] [added: 42  \| 2018] Form 10-K [removed: \|  47] | [added: | |]

| years ended December 31 (in millions, except per share data) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Net revenues | $ | [removed: 28,216] [added: 32,753] | | | $ | [removed: 25,638] [added: 28,216] | | | $ | [removed: 22,859] [added: 25,638] | |

| Cost of products sold | [removed: 7,040] [added: $] | [added: 27] | | | [removed: 5,833] [added: $] | [added: 23] | | | [removed: 4,500] [added: $] | [added: 22] | |

| Selling, general and administrative | [removed: 6,275] [added: 7,399] | | | | [removed: 5,855] [added: 6,295] | | | | [removed: 6,387] [added: 5,881] | | |

| Acquired in-process research and development | [removed: 327] [added: 424] | | | | [removed: 200] [added: 327] | | | | [removed: 150] [added: 200] | | |

| Total operating costs and expenses | [removed: 18,624] [added: 26,370] | | | | [removed: 16,254] [added: 18,671] | | | | [removed: 15,322] [added: 16,298] | | |

| Interest expense, net | [removed: 1,004] [added: 1,144] | | | | [removed: 965] [added: 1,004] | | | | [removed: 686] [added: 965] | | |

| Net foreign exchange loss | [removed: 348] [added: 24] | | | | [removed: 303] [added: 348] | | | | [removed: 193] [added: 303] | | |

| Other expense, net | [removed: 513] [added: 18] | | | | [removed: 232] [added: 466] | | | | [removed: 13] [added: 188] | | |

| [removed: Earnings] [added: Total earnings] before income tax expense | [removed: 7,727] [added: $] | [added: 5,197] | | | [removed: 7,884] [added: $] | [added: 7,727] | | | [removed: 6,645] [added: $] | [added: 7,884] | |

| Income tax expense [added: (benefit)] | [removed: 2,418] [added: (490] | | [added: )] | | [removed: 1,931] [added: 2,418] | | | | [removed: 1,501] [added: 1,931] | | |

| Net earnings | $ | [removed: 5,309] [added: 5,687] | | | $ | [removed: 5,953] [added: 5,309] | | | $ | [removed: 5,144] [added: 5,953] | |

| Basic earnings per share | $ | [removed: 3.31] [added: 3.67] | | | $ | [removed: 3.65] [added: 3.31] | | | $ | [removed: 3.15] [added: 3.65] | |

| Diluted earnings per share | $ | [removed: 3.30] [added: 3.66] | | | $ | [removed: 3.63] [added: 3.30] | | | $ | [removed: 3.13] [added: 3.63] | |

| Cash dividends declared per common share | $ | [removed: 2.63] [added: 0.96] | | | $ | [removed: 2.35 | | | $] [added: 0.64] | [removed: 2.10] | |

| Weighted-average basic shares outstanding | [removed: 1,596] [added: 1,541] | | | | [removed: 1,622] [added: 1,596] | | | | [removed: 1,625] [added: 1,622] | | |

| Weighted-average diluted shares outstanding | [removed: 1,603] [added: 1,546] | | | | [removed: 1,631] [added: 1,603] | | | | [removed: 1,637] [added: 1,631] | | |

| [removed: 48  \| 2017 Form 10-K] | | [added: 2018 Form 10-K \|  43] |

| years ended December 31 (in millions) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | |

| Foreign currency translation adjustments, net of tax expense (benefit) of [added: $(18) in 2018,] $34 in [removed: 2017,] [added: 2017 and] $(31) in 2016 [removed: and $(139) in 2015] | [removed: 996] [added: (391] | | [added: )] | | [removed: (165] [added: 996] | | [removed: )] | | [removed: (667] [added: (165] | | ) |

| Net investment hedging activities, net of tax expense (benefit) of [added: $40 in 2018,] $(194) in [removed: 2017,] [added: 2017 and] $79 in 2016 [removed: and $— in 2015] | [removed: (343] [added: 138] | | [removed: )] | | [removed: 140] [added: (343] | | [added: )] | | [removed: —] [added: 140] | | |

| Pension and post-employment benefits, net of tax expense (benefit) of [added: $35 in 2018,] $(94) in [removed: 2017,] [added: 2017 and] $(75) in 2016 [removed: and $96 in 2015] | [removed: (406] [added: 197] | | [removed: )] | | [removed: (135] [added: (406] | | ) | | [removed: 230] [added: (135] | | [added: )] |

| Marketable security activities, net of tax expense (benefit) of [added: $— in 2018,] $(8) in [removed: 2017,] [added: 2017 and] $(11) in 2016 [removed: and $22 in 2015] | [removed: (46] [added: (10] | | ) | | [removed: (1] [added: (46] | | ) | | [removed: 44] [added: (1] | | [added: )] |

| Cash flow hedging activities, net of tax expense (benefit) of [added: $23 in 2018,] $(26) in [removed: 2017,] [added: 2017 and] $18 in 2016 [removed: and $(6) in 2015] | [removed: (342] [added: 313] | | [removed: )] | | [removed: 136] [added: (342] | | [added: )] | | [removed: (137] [added: 136] | | [removed: )] |

| Other comprehensive [removed: loss] [added: income (loss)] | [removed: (141] [added: 247] | | [removed: )] | | [removed: (25] [added: (141] | | ) | | [removed: (530] [added: (25] | | ) |

| Comprehensive income | $ | [removed: 5,168] [added: 5,934] | | | $ | [removed: 5,928] [added: 5,168] | | | $ | [removed: 4,614] [added: 5,928] | |

| [removed: | | 2017] [added: 44  \| 2018] Form 10-K [removed: \|  49] | [added: | |]

| as of December 31 (in millions, except share data) | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Cash and equivalents | $ | [removed: 9,303] [added: 7,289] | | | $ | [removed: 5,100] [added: 9,303] | |

| Short-term investments | [removed: 486] [added: 772] | | | | [removed: 1,323] [added: 486] | | |

| Accounts receivable, net | [removed: 5,088] [added: 5,384] | | | | [removed: 4,758] [added: 5,088] | | |

| Inventories | 1,605 | | | | [removed: 1,444] [added: 1,605] | | |

| Cost of products sold | 7,718 | | | | 7,042 | | | | 5,832 | | |

| Research and development | 10,329 | | | | 5,007 | | | | 4,385 | | |

| Other expense | 500 | | | | — | | | | — | | |

| Operating earnings | 6,383 | | | | 9,545 | | | | 9,340 | | |

| Net earnings | $ | 5,687 | | | $ | 5,309 | | | $ | 5,953 | |

| Adoption of new accounting standards(a) | — | | | — | | | | — | | | | — | | | | (1,733 | | ) | | — | | | | (1,733 | | ) |

| Balance at December 31, 2018 | 1,479 | | | $ | 18 | | | $ | (24,108 | ) | | $ | 14,756 | | | $ | 3,368 | | | $ | (2,480 | ) | | $ | (8,446 | ) |

| Net earnings | $ | 5,687 | | | $ | 5,309 | | | $ | 5,953 | |

| Inventories | (226 | | ) | | 93 | | | | (38 | | ) |

| Net change in commercial paper borrowings | 299 | | | | 23 | | | | (23 | | ) |

| Proceeds from issuance of other short-term borrowings | 3,002 | | | | — | | | | — | | |

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

AbbVie recognizes revenue when control of promised goods or services is transferred to the company’s customers, in an amount that reflects the consideration AbbVie expects to be entitled to in exchange for those goods or services.

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

AbbVie 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.

The company recognizes shipping and handling costs as an expense in cost of products sold when the company transfers control to the customer.

Payment terms vary depending on the type and location of the customer, are based on customary commercial terms and are generally less than one year.

AbbVie does not adjust revenue for the effects of a significant financing component for contracts where AbbVie expects the period between the transfer of the good or service and collection to be one year or less.

Provisions for variable consideration are based on current pricing, executed contracts, government pricing legislation and historical data and are provided for in the period the related revenues are recorded.

In addition to revenue from contracts with customers, the company also recognizes certain collaboration revenues.

See Note 6 for additional information related to the collaboration with Janssen Biotech, Inc. Additionally, see Note 15 for disaggregation of revenue by product and geography.

Investments in equity securities that have readily determinable fair values are recorded at fair value.

Investments in equity securities that do not have readily determinable fair values are recorded at cost and are remeasured to fair value based on certain observable price changes or impairment events as they occur.

Held-to-

maturity debt securities are recorded at cost.

Gains or losses on investments are included in other expense, net in the consolidated statements of earnings.

| as of December 31 (in millions) | 2018 | | | | 2017 | | |

becomes available.

AbbVie tests indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount.

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

remeasured as if the functional currency were the reporting currency.

ASU No. 2014-09

Results for reporting periods beginning after December 31, 2017 have been presented in accordance with the standard, while results for prior periods have not been adjusted and continue to be reported in accordance with AbbVie’s historical accounting.

The cumulative effect of initially applying the new revenue standard was recognized as an adjustment to the opening balance of retained earnings as of January 1, 2018.

For certain licensing arrangements where revenue was previously deferred and recognized over time, revenue is now recognized at the point in time when the license is granted.

Additionally, for certain contract manufacturing arrangements where revenue was previously recognized at a point in time at the end of the manufacturing process, revenue is now recognized over time throughout the manufacturing process.

The adjustment to the consolidated balance sheet included: (i) a $42 million increase to prepaid expenses and other; (ii) a $39 million decrease to inventories; (iii) a $57 million decrease to accounts payable and accrued liabilities; (iv) a $75 million decrease to other long-term liabilities; (v) a $22 million increase to deferred income taxes; and (vi) a $124 million increase to retained earnings.

Other cumulative-effect adjustments to the consolidated balance sheet were insignificant.

The impact of adoption on the company’s consolidated statements of earnings in 2018 was as follows:

| | | | |

| --- | --- | --- | --- |

| Research and development | 4,982 | | | | 4,366 | | | | 4,285 | | |

| Operating earnings | 9,592 | | | | 9,384 | | | | 7,537 | | |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at December 31, 2014 | 1,591 | | | $ | 16 | | | $ | (972 | ) | | $ | 4,194 | | | $ | 535 | | | $ | (2,031 | ) | | $ | 1,742 | |

| Common shares issued to Pharmacyclics stockholders | 128 | | | 1 | | | | — | | | | 8,404 | | | | — | | | | — | | | | 8,405 | | |

| Inventories | 93 | | | | (38 | | ) | | (434 | | ) |

Substantially all of AbbVie's net revenues in the United States are to three wholesalers.

AbbVie incurred separation-related expenses of $270 million in 2015, which were principally classified in selling, general and administrative expenses (SG&A) in the consolidated statements of earnings.

Basis of Historical Presentation

For a certain portion of AbbVie’s operations, the legal transfer of AbbVie’s assets (net of liabilities) did not occur with the separation of AbbVie on January 1, 2013 due to the time required to transfer marketing authorizations and satisfy other regulatory requirements in certain countries.

Under the terms of the separation agreement with Abbott, AbbVie was responsible for the business activities conducted by Abbott on its behalf and was subject to the risks and entitled to the benefits generated by these operations and assets.

As a result, the related assets and liabilities and results of operations were reported in AbbVie’s consolidated financial statements.

All of these operations were transferred to AbbVie as of December 31, 2016.

Net revenues related to these operations were insignificant in 2016 and were $213 million in 2015.

All other investments are generally accounted for using the cost method.

AbbVie recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability of the sales price is reasonably assured.

Revenue from product sales is recognized when title and risk of loss have passed to the customer.

rebate, the applicable price terms and the estimated lag time between sale and payment of the rebate, which can be significant.

Historical data is readily available and reliable and is used for estimating the amount of the reduction in gross revenues.

Revenue from the launch of a new product, from an improved version of an existing product, or for shipments in excess of a customer's normal requirements are recorded when the conditions noted above are met.

In those situations, management records a returns reserve for such revenue, if necessary.

Sales of product rights for marketable products are recorded as revenue upon disposition of the rights.

Investments in equity securities that are not traded on public stock exchanges and held-to-maturity debt securities are recorded at cost.

In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business.

The standard provides clarifying guidance to assist in the evaluation of whether transactions are treated as business combinations or asset acquisitions.

In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting.

In addition, excess tax benefits in the statement of cash flows are now classified as an operating activity rather than as a financing activity.

AbbVie adopted these changes prospectively.

Accordingly, the company recognized excess tax benefits in income tax expense of $71 million in 2017 and classified them within cash flows from operating activities.

AbbVie can apply the amendments using one of the following two methods: (i) retrospectively to each prior reporting period presented, or (ii) modified retrospectively with the cumulative effect of initially applying the amendments recognized at the date of initial application.

These provisions will not impact the accounting for AbbVie's investments in debt securities.

The new guidance also changes certain disclosure requirements and other aspects of current U.S. GAAP.

Amendments are to be applied as a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.

first quarter of 2018.

The new standard must be adopted using the modified retrospective approach and will be effective for AbbVie starting with the first quarter of 2019, with early adoption permitted.

The standard will be effective for AbbVie starting with the first quarter of 2018.

Adjustments for this update are to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings with any adjustments reflected as of the beginning of the fiscal year of adoption.

Gonzalez, and the Chief Financial Officer, [removed: William J.][added: Robert A.]

[removed: Chase,] [added: Michael,] evaluated the effectiveness of AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie's disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in AbbVie's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, AbbVie's internal control over financial reporting during the quarter ended December 31, [removed: 2017.][added: 2018.]

Management assessed the effectiveness of AbbVie's internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

Based on that assessment, management concluded that AbbVie maintained effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on the COSO criteria.

The effectiveness of AbbVie's internal control over financial reporting as of December 31, [removed: 2017] [added: 2018] has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation report below, which expresses an unqualified opinion on the effectiveness of AbbVie's internal control over financial reporting as of December 31, [removed: 2017.][added: 2018.]

| | | [removed: 2017] [added: 2018] Form 10-K \| [removed:  95] [added:  89] |

| [removed: 96 ] [added: 90 ] \| [removed: 2017] [added: 2018] Form 10-K | | |

We have audited AbbVie Inc. and subsidiaries' internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, AbbVie Inc. and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of AbbVie Inc. and subsidiaries as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] and the related notes [removed: of the Company] and our report dated February [removed: 16, 2018] [added: 27, 2019] expressed an unqualified opinion thereon.