AbbVie 10-Q 2022-06-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2022

OR

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

For the transition period from to

Commission File Number: 001-35565

AbbVie Inc.

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

1 North Waukegan Road

North Chicago, Illinois 60064-6400

Telephone: (847) 932-7900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

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

Large Accelerated Filer			☒			Accelerated Filer			☐
Non-Accelerated Filer			☐			Smaller reporting company			☐
						Emerging growth company			☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

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

Title of each class						Trading Symbol(s)						Name of each exchange on which registered
Common Stock, par value $0.01 per share						ABBV						New York Stock Exchange
												Chicago Stock Exchange
1.500% Senior Notes due 2023						ABBV23B						New York Stock Exchange
1.375% Senior Notes due 2024						ABBV24						New York Stock Exchange
1.250% Senior Notes due 2024						ABBV24B						New York Stock Exchange
0.750% Senior Notes due 2027						ABBV27						New York Stock Exchange
2.125% Senior Notes due 2028						ABBV28						New York Stock Exchange
2.625% Senior Notes due 2028						ABBV28B						New York Stock Exchange
2.125% Senior Notes due 2029						ABBV29						New York Stock Exchange
1.250% Senior Notes due 2031						ABBV31						New York Stock Exchange

As of July 27, 2022, AbbVie Inc. had 1,768,096,495 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents

PART I.			FINANCIAL INFORMATION
						Page
Item 1.			FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA			1
Item 2.			MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			25
Item 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			35
Item 4.			CONTROLS AND PROCEDURES			35
PART II.			OTHER INFORMATION
Item 1.			LEGAL PROCEEDINGS			37
Item 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			37
Item 6.			EXHIBITS			38

PART I. FINANCIAL INFORMATION

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

						Three months ended June 30,												Six months ended June 30,
(in millions, except per share data)						2022						2021						2022						2021
Net revenues						$	14,583					$	13,959					$	28,121					$	26,969
Cost of products sold						4,170						4,523						8,222						8,736
Selling, general and administrative						5,412						3,164						8,539						6,006
Research and development						1,609						1,767						3,106						3,434
Acquired IPR&D and milestones						269						132						414						317
Other operating income						(172)						(68)						(172)						(68)
Total operating costs and expenses						11,288						9,518						20,109						18,425
Operating earnings						3,295						4,441						8,012						8,544
Interest expense, net						532						606						1,071						1,228
Net foreign exchange loss						47						14						72						23
Other expense, net						1,533						2,658						757						2,263
Earnings before income tax expense						1,183						1,163						6,112						5,030
Income tax expense						255						394						691						706
Net earnings						928						769						5,421						4,324
Net earnings attributable to noncontrolling interest						4						3						7						5
Net earnings attributable to AbbVie Inc.						$	924					$	766					$	5,414					$	4,319
Per share data
Basic earnings per share attributable to AbbVie Inc.						$	0.52					$	0.42					$	3.04					$	2.42
Diluted earnings per share attributable to AbbVie Inc.						$	0.51					$	0.42					$	3.03					$	2.41
Weighted-average basic shares outstanding						1,770						1,769						1,770						1,769
Weighted-average diluted shares outstanding						1,776						1,776						1,777						1,776

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

2022 Form 10-Q |			1

AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (unaudited)

			Three months ended June 30,												Six months ended June 30,
(in millions)			2022						2021						2022						2021
Net earnings			$	928					$	769					$	5,421					$	4,324
Foreign currency translation adjustments, net of tax expense (benefit) of $(12) for the three months and $(19) for the six months ended June 30, 2022 and $1 for the three months and $(24) for the six months ended June 30, 2021			(823)						244						(1,054)						(433)
Net investment hedging activities, net of tax expense (benefit) of $146 for the three months and $183 for the six months ended June 30, 2022 and $(31) for the three months and $72 for the six months ended June 30, 2021			536						(114)						666						260
Pension and post-employment benefits, net of tax expense (benefit) of $11 for the three months and $21 for the six months ended June 30, 2022 and $14 for the three months and $33 for the six months ended June 30, 2021			48						50						76						129
Cash flow hedging activities, net of tax expense (benefit) of $5 for the three months and $3 for the six months ended June 30, 2022 and $— for the three months and $3 for the six months ended June 30, 2021			27						12						15						58
Other comprehensive income (loss)			(212)						192						(297)						14
Comprehensive income			716						961						5,124						4,338
Comprehensive income attributable to noncontrolling interest			4						3						7						5
Comprehensive income attributable to AbbVie Inc.			$	712					$	958					$	5,117					$	4,333

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

2022 Form 10-Q |			2

AbbVie Inc. and Subsidiaries Condensed Consolidated Balance Sheets

(in millions, except share data)			June 30, 2022						December 31, 2021
			(unaudited)
Assets
Current assets
Cash and equivalents			$	8,521					$	9,746
Short-term investments			1,440						84
Accounts receivable, net			11,237						9,977
Inventories			3,396						3,128
Prepaid expenses and other			4,506						4,993
Total current assets			29,100						27,928
Investments			244						277
Property and equipment, net			4,958						5,110
Intangible assets, net			71,8

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The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of June 30, 2022 and December 31, 2021 and the results of operations for the three and six months ended June 30, 2022 and 2021. This commentary should be read in conjunction with the Condensed Consolidated Financial Statements and accompanying notes appearing in Item 1, “Financial Statements and Supplementary Data.”

EXECUTIVE OVERVIEW

Company Overview

AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world’s most complex and serious diseases.

AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products primarily to customers or through distributors, depending on the market served. Certain products are co-marketed or co-promoted with other companies. AbbVie has approximately 50,000 employees. AbbVie operates as a single global business segment.

2022 Strategic Objectives

AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. AbbVie intends to continue to advance its mission in a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) growing revenues by leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas and ensuring strong commercial execution of new product launches; (iii) continuing to invest in and expand its pipeline in support of opportunities in immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key on-market products; (iv) expanding operating margins; and (v) returning cash to shareholders via a strong and growing dividend while also reducing debt. In addition, AbbVie anticipates several regulatory submissions and data readouts from key clinical trials in the next 12 months.

Financial Results

The company's financial performance for the six months ended June 30, 2022 included delivering worldwide net revenues of $28.1 billion, operating earnings of $8.0 billion, diluted earnings per share of $3.03 and cash flows from operations of $9.9 billion. Worldwide net revenues grew by 4% on a reported basis and 6% on a constant currency basis, reflecting growth across its immunology, neuroscience and aesthetics portfolios.

Diluted earnings per share was $3.03 for the six months ended June 30, 2022 and included the following after-tax costs: (i) $3.1 billion related to the amortization of intangible assets; (ii) $1.9 billion for charges related to litigation matters; (iii) $875 million for the change in fair value of contingent consideration liabilities; and (iv) $219 million of acquisition and integration expenses. These costs were partially offset by an after-tax gain of $126 million related to the divestiture of Pylera. Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization. The integration plan is expected to realize approximately $2.5 billion of annual cost synergies in 2022.

To achieve these integration objectives, AbbVie expects to incur total cumulative charges of approximately $2 billion through 2022. These costs consist of severance and employee benefit costs (cash severance, non-cash severance, including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

2022 Form 10-Q |			25

Recent Global Events

Russia/Ukraine

In response to the military conflict between Russia and Ukraine, the United States and other North Atlantic Treaty Organization member states, as well as certain non-member states, announced targeted economic sanctions and export controls on Russia and Belarus. These include restrictions on the export and transfer of products containing certain toxins, including Botox, to Russia and Belarus. With the exception of Botox, AbbVie is not prohibited to continue the sale of essential pharmaceutical products to help ensure patients receive an uninterrupted supply of their medicines. In March 2022, AbbVie announced the suspension of operations for all aesthetics products in Russia. In April 2022, AbbVie also announced that all profits from the sales of essential medicines in Russia will be donated to support direct humanitarian relief efforts in Ukraine. While the company’s operations in Russia, Belarus and Ukraine are not significant, if the conflict escalates and results in broader economic and political concerns, AbbVie’s business could be adversely impacted.

Impact of the Coronavirus Disease 2019 (COVID-19)

In response to the ongoing public health crisis posed by COVID-19, AbbVie continues to focus on ensuring the safety of employees. Throughout the pandemic, AbbVie has followed health and safety guidance from state and local health authorities and implemented safety measures for those employees who are returning to the workplace.

AbbVie also continues to closely manage manufacturing and supply chain resources around the world to help ensure that patients continue to receive an uninterrupted supply of their medicines. Clinical trial sites are being monitored locally to protect the safety of study participants, staff and employees. While the impact of COVID-19 on AbbVie's operations to date has not been material, AbbVie continues to experience lower new patient starts in certain products and markets. AbbVie expects this matter could continue to negatively impact its results of operations throughout the duration of the pandemic.

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

Research and Development

Research and innovation are the cornerstones of AbbVie’s business as a global biopharmaceutical company. AbbVie’s long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.

AbbVie’s pipeline currently includes approximately 80 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care. Of these programs, more than 40 are in mid- and late-stage development.

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

Significant Programs and Developments

Immunology

Skyrizi

• In January 2022, AbbVie announced that the U.S. Food and Drug Administration (FDA) approved Skyrizi for the treatment of adults with active psoriatic arthritis.

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

Rinvoq

• In January 2022, AbbVie announced its submission of a supplemental New Drug Application (sNDA) to the FDA for Rinvoq for the treatment of adults with active non-radiographic axial spondyloarthritis (nr-axSpA) with objective signs of inflammation who have responded inadequately to nonsteroidal anti-inflammatory drugs (NSAIDs).

2022 Form 10-Q |			26

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

• In February 2022, AbbVie was notified that the European Commission (EC) is requesting the European Medicines Agency (EMA) to assess safety concerns associated with JAK inhibitor products authorized in inflammatory diseases and to evaluate the impact of these events on their benefit-risk balance. The assessment covers all JAK inhibitors approved for use in inflammatory diseases.

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

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

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

• In May 2022, AbbVie announced positive top-line results from U-ENDURE, its Phase 3 maintenance study for Rinvoq in adult patients with moderate to severe Crohn's disease who had an inadequate response or were intolerant to a conventional or biologic therapy. The results showed that more patients treated with Rinvoq achieved the co-primary and secondary endpoints at one year compared to placebo.

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

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

• In July 2022, AbbVie announced that the EC approved Rinvoq for the treatment of adult patients with active nr-axSpA.

Oncology

Teliso-V

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

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

Imbruvica

• In February 2022, AbbVie submitted an sNDA to the FDA for Imbruvica for the treatment of pediatric and adolescent patients one year and older with chronic graft versus host disease after failure of one or more lines of systemic therapy.

Epcoritamab

• In March 2022, Genmab A/S (Genmab) announced that FDA granted orphan-drug designation to the investigational medicine, epcoritamab (DuoBody-CD3xCD20), for the treatment of follicular lymphoma. Genmab and AbbVie are co-developing epcoritamab and will share commercial responsibilities in the U.S. and Japan, with AbbVie responsible for further global commercialization.

2022 Form 10-Q |			27

• In June 2022, AbbVie announced primary results from the large B-cell lymphoma expansion cohort in the EPCORE NHL-1 phase 2 clinical trial evaluating epcoritamab, an investigational subcutaneous bispecific antibody. In this study, epcoritamab demonstrated efficacy with durable responses in patients who had previously received at least two prior lines of anti-lymphoma therapy including chimeric antigen receptor T-cell therapy.

Aesthetics

Juvederm Collection

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

BoNTE

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

Neuroscience

Vraylar

• In February 2022, AbbVie submitted an sNDA to the FDA for Vraylar for the adjunctive treatment of major depressive disorder in patients who are receiving ongoing antidepressant therapy.

Qulipta

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

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

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

ABBV-951

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

Eye Care

Vuity

• In April 2022, AbbVie announced that the Phase 3 VIRGO trial evaluating the safety and efficacy of investigational twice-daily administration of Vuity 1.25% in adults with presbyopia met its primary efficacy endpoint.

• In June 2022, AbbVie submitted an sNDA to the FDA for twice-daily administration of Vuity 1.25% in adults with presbyopia.

For a more comprehensive discussion of AbbVie’s products and pipeline, see the company’s Annual Report on Form 10-K for the year ended December 31, 2021.

2022 Form 10-Q |			28

RESULTS OF OPERATIONS

Net Revenues

The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year’s foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company’s operations and can facilitate analysis of the company’s results of operations, particularly in evaluating performance from one period to another.

						Three months ended June 30,												Percent change												Six months ended June 30,												Percent change
									At actual currency rates						At constant currency rates									At actual currency rates						At constant currency rates
(dollars in millions)						2022						2021									2022						2021
United States						$	11,410					$	10,804					5.6		%				5.6		%				$	21,758					$	20,554					5.9		%				5.9		%
International						3,173						3,155						0.6		%				7.6		%				6,363						6,415						(0.8)		%				5.3		%
Net revenues						$	14,583					$	13,959					4.5		%				6.1		%				$	28,121					$	26,969					4.3		%				5.7		%

2022 Form 10-Q |			29

The following table details AbbVie’s worldwide net revenues:

									Three months ended June 30,												Percent change												Six months ended June 30,												Percent change
												At actual currency rates						At constant currency rates									At actual currency rates						At constant currency rates
(dollars in millions)									2022						2021									2022						2021
Immunology
Humira			United States						$	4,664					$	4,257					9.6		%				9.6		%				$	8,657					$	8,164					6.0		%				6.0		%
			International						699						811						(13.8)		%				(7.3)		%				1,442						1,771						(18.6)		%				(13.1)		%
			Total						$	5,363					$	5,068					5.8		%				6.8		%				$	10,099					$	9,935					1.7		%				2.7		%
Skyrizi			United States						$	1,079					$	565					91.1		%				91.1		%				$	1,860					$	1,046					77.8		%				77.8		%
			International						173						109						59.1		%				73.9		%				332						202						64.7		%				78.1		%
			Total						$	1,252					$	674					85.9		%				88.3		%				$	2,192					$	1,248					75.7		%				77.9		%
Rinvoq			United States						$	412					$	296					39.4		%				39.4		%				$	723					$	541					33.7		%				33.7		%
			International						180						82						>100.0 %						>100.0 %						334						140						>100.0 %						>100.0 %
			Total						$	592					$	378					56.3		%				60.7		%				$	1,057					$	681					55.1		%				59.2		%
Hematologic Oncology
Imbruvica			United States						$	862					$	1,099					(21.6)		%				(21.6)		%				$	1,736					$	2,098					(17.2)		%				(17.2)		%
			Collaboration revenues						283						282						0.5		%				0.5		%				582						551						5.6		%				5.6		%
			Total						$	1,145					$	1,381					(17.1)		%				(17.1)		%				$	2,318					$	2,649					(12.5)		%				(12.5)		%
Venclexta			United States						$	253					$	223					13.4		%				13.4		%				$	481					$	448					7.5		%				7.5		%
			International						252						212						19.1		%				29.3		%				497						392						26.8		%				36.7		%
			Total						$	505					$	435					16.2		%				21.2		%				$	978					$	840					16.5		%				21.1		%
Aesthetics
Botox Cosmetic			United States						$	449					$	366					22.4		%				22.4		%				$	862					$	671					28.3		%				28.3		%
			International						246						218						12.9		%				19.2		%				474						390						21.5		%				27.7		%
			Total						$	695					$	584					18.9		%				21.2		%				$	1,336					$	1,061					25.8		%				28.1		%
Juvederm Collection			United States						$	147					$	196					(24.9)		%				(24.9)		%				$	295					$	319					(7.5)		%				(7.5)		%
			International						197						232						(15.0)		%				(8.1)		%				459						430						6.7		%				13.0		%
			Total						$	344					$	428					(19.5)		%				(15.7)		%				$	754					$	749					0.7		%				4.3		%
Other Aesthetics			United States						$	287					$	363					(20.9)		%				(20.9)		%				$	572					$	663					(13.6)		%				(13.6)		%
			International						45						59						(24.4)		%				(20.2)		%				83						102						(18.3)		%				(14.3)		%
			Total						$	332					$	422					(21.4)		%				(20.8)		%				$	655					$	765					(14.2)		%				(13.7)		%
Neuroscience
Botox Therapeutic			United States						$	557					$	488					14.2		%				14.2		%				$	1,057					$	917					15.3		%				15.3		%
			International						121						115						5.6		%				15.6		%				235						218						8.0		%				16.3		%
			Total						$	678					$	603					12.6		%				14.5		%				$	1,292					$	1,135					13.9		%				15.5		%
Vraylar			United States						$	492					$	432					13.9		%				13.9		%				$	919					$	778					18.1		%				18.1		%
Duodopa			United States						$	26					$	25					3.2		%				3.2		%				$	50					$	50					(1.2)		%				(1.2)		%
			International						94						102						(7.4)		%				2.2		%				191						206						(7.2)		%				1.3		%
			Total						$	120					$	127					(5.4)		%				2.3		%				$	241					$	256					(6.0)		%				0.8		%
Ubrelvy			United States						$	185					$	126					47.6		%				47.6		%				$	323					$	207					56.4		%				56.4		%
Qulipta			United States						$	33					$	—					n/m						n/m						$	44					$	—					n/m						n/m
Other Neuroscience			United States						$	145					$	167					(13.6)		%				(13.6)		%				$	318					$	323					(1.7)		%				(1.7)		%
			International						5						4						9.6		%				12.9		%				9						8						10.4		%				12.6		%
			Total						$	150					$	171					(12.9)		%				(12.8)		%				$	327					$	331					(1.4)		%				(1.3)		%

2022 Form 10-Q |			30

									Three months ended June 30,												Percent change												Six months ended June 30,												Percent change
												At actual currency rates						At constant currency rates									At actual currency rates						At constant currency rates
(dollars in millions)									2022						2021									2022						2021
Eye Care
Lumigan/Ganfort			United States						$	60					$	72					(17.4)		%				(17.4)		%				$	127					$	138					(8.3)		%				(8.3)		%
			International						70						77						(8.1)		%				(0.9)		%				143						154						(6.9)		%				(0.1)		%
			Total						$	130					$	149					(12.5)		%				(8.7)		%				$	270					$	292					(7.5)		%				(3.9)		%
Alphagan/Combigan			United States						$	54					$	102					(48.5)		%				(48.5)		%				$	124					$	182					(32.3)		%				(32.3)		%
			International						38						40						(2.3)		%				6.6		%				75						78						(3.1)		%				6.0		%
			Total						$	92					$	142					(35.6)		%				(33.1)		%				$	199					$	260					(23.6)		%				(20.9)		%
Restasis			United States						$	151					$	312					(51.5)		%				(51.5)		%				$	386					$	579					(33.2)		%				(33.2)		%
			International						17						15						14.9		%				24.2		%				28						28						(0.2)		%				14.0		%
			Total						$	168					$	327					(48.4)		%				(48.0)		%				$	414					$	607					(31.7)		%				(31.0)		%
Other Eye Care			United States						$	142					$	130					9.7		%				9.7		%				$	266					$	247					7.7		%				7.7		%
			International						185						171						7.4		%				16.0		%				339						330						2.6		%				10.5		%
			Total						$	327					$	301					8.4		%				13.2		%				$	605					$	577					4.8		%				9.3		%
Other Key Products
Mavyret			United States						$	203					$	204					0.2		%				0.2		%				$	372					$	374					(0.4)		%				(0.4)		%
			International						195						238						(18.0)		%				(9.8)		%				406						483						(15.9)		%				(8.4)		%
			Total						$	398					$	442					(9.7)		%				(5.3)		%				$	778					$	857					(9.1)		%				(4.9)		%
Creon			United States						$	318					$	280					13.6		%				13.6		%				$	605					$	554					9.2		%				9.2		%
Linzess/Constella			United States						$	247					$	260					(4.2)		%				(4.2)		%				$	480					$	475					1.3		%				1.3		%
			International						8						8						(12.5)		%				(7.8)		%				15						15						(3.8)		%				0.7		%
			Total						$	255					$	268					(4.5)		%				(4.4)		%				$	495					$	490					1.1		%				1.2		%
All other									$	1,009					$	1,221					(17.5)		%				(16.4)		%				$	2,220					$	2,697					(17.8)		%				(16.8)		%
Total net revenues									$	14,583					$	13,959					4.5		%				6.1		%				$	28,121					$	26,969					4.3		%				5.7		%

n/m – Not meaningful

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

Global Humira sales increased by 7% for the three months and 3% for the six months ended June 30, 2022 primarily driven by market growth across therapeutic categories, partially offset by direct biosimilar competition in certain international markets. In the United States, Humira sales increased by 10% for the three months and 6% for the six months ended June 30, 2022 primarily driven by market growth across all indications and favorable pricing. This increase was partially offset by lower market share following corresponding market share gains of Skyrizi and Rinvoq. Internationally, Humira revenues decreased by 7% for the three months and 13% for the six months ended June 30, 2022 primarily driven by direct biosimilar competition in certain international markets.

Net revenues for Skyrizi increased by 88% for the three months and 78% for the six months ended June 30, 2022 primarily driven by continued strong volume and market share uptake since launch as a treatment for plaque psoriasis as well as market growth. Net revenues for the three and six months ended June 30, 2022 were also favorably impacted by recent regulatory approvals and expansion of Skyrizi for the treatment of psoriatic arthritis.

Net revenues for Rinvoq increased by 61% for the three months and 59% for the six months ended June 30, 2022 primarily driven by continued strong volume and market share uptake since launch for the treatment of moderate to severe rheumatoid arthritis as well as market growth. Net revenues for the three and six months ended June 30, 2022 were also favorably impacted by recent regulatory approvals and expansion of Rinvoq for the treatment of psoriatic arthritis, atopic dermatitis, ankylosing spondylitis and ulcerative colitis.

Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie’s 50% share of Imbruvica profit. AbbVie's global Imbruvica revenues decreased by 17% for the three months and 13% for the six months ended June 30, 2022 as a result of decreased market demand and lower new patient starts in the United States. The decrease in net revenues for the six months ended June 30, 2022 was also partially offset by increased collaboration revenues.

Net revenues for Venclexta increased by 21% for the three and six months ended June 30, 2022 primarily due to continued expansion of Venclexta for the treatment of patients with chronic lymphocytic leukemia (CLL), relapsed/refractory CLL and acute myeloid leukemia.

2022 Form 10-Q |			31

Net revenues for Botox Cosmetic used in facial aesthetics increased by 21% for the three months and 28% for the six months ended June 30, 2022 due to increased consumer demand driven by targeted brand investment.

Net revenues for Juvederm Collection used in facial aesthetics decreased by 16% for the three months ended June 30, 2022 due to COVID-19 restrictions in China and suspension of aesthetic operations in Russia. Net revenues for Juvederm Collection increased 4% for the six months ended June 30, 2022 due to market growth partially offset by COVID-19 restrictions in China and suspension of aesthetic operations in Russia. In the United States, net revenues for the three and six months ended June 30, 2022 were unfavorably impacted by higher revenues in the prior year due to a one-time promotion in the three months ended June 30, 2021.

Net revenues for Botox Therapeutic used primarily in neuroscience and urology therapeutic areas increased by 14% for the three months and 15% for the six months ended June 30, 2022 due to market growth.

Net revenues for Vraylar for the treatment of schizophrenia, bipolar I disorder and bipolar depression increased by 14% for the three months and 18% for the six months ended June 30, 2022 due to higher market share and market growth.

Net revenues for Ubrelvy for the acute treatment of migraine with or without aura in adults increased by 48% for the three months and 56% for the six months ended June 30, 2022 primarily due to increased market share uptake since launch.

Net revenues for Mavyret decreased by 5% for the three and six months ended June 30, 2022 due to the continued disruption of global HCV markets due to the COVID-19 pandemic.

Gross Margin

						Three months ended June 30,																		Six months ended June 30,
(dollars in millions)						2022						2021						% change						2022						2021						% change
Gross margin						$	10,413					$	9,436					10		%				$	19,899					$	18,233					9		%
as a % of net revenues						71		%				68		%										71		%				68		%

Gross margin as a percentage of net revenues increased for the three and six months ended June 30, 2022 compared to the prior year. Gross margin percentage for the three and six months ended June 30, 2022 was favorably impacted by changes in product mix and lower amortization of intangible assets associated with the Allergan acquisition.

Selling, General and Administrative

						Three months ended June 30,																		Six months ended June 30,
(dollars in millions)						2022						2021						% change						2022						2021						% change
Selling, general and administrative						$	5,412					$	3,164					71		%				$	8,539					$	6,006					42		%
as a % of net revenues						37		%				23		%										30		%				22		%

Selling, general and administrative (SG&A) expenses as a percentage of net revenues increased for the three and six months ended June 30, 2022 compared to the prior year. SG&A expense percentage for the three and six months ended June 30, 2022 was unfavorably impacted by litigation reserve charges of $2.2 billion for the three months and $2.4 billion for the six months ended June 30, 2022.

Research and Development and Acquired IPR&D and Milestones

						Three months ended June 30,																		Six months ended June 30,
(dollars in millions)						2022						2021						% change						2022						2021						% change
Research and development						$	1,609					$	1,767					(9)		%				$	3,106					$	3,434					(10)		%
as a % of net revenues						11		%				13		%										11		%				13		%
Acquired IPR&D and milestones						$	269					$	132					>100%						$	414					$	317					31		%

Research and development (R&D) expenses as a percentage of net revenues decreased for the three and six months ended June 30, 2022 compared to the prior year. R&D expense percentage was favorably impacted by the purchase of priority review vouchers from third parties during the three and six months ended June 30, 2021, increased scale of the combined company and synergies realized as well as lower integration costs related to the acquisition of Allergan.

2022 Form 10-Q |			32

Acquired IPR&D and milestones expense represents upfront and subsequent development milestone payments incurred prior to regulatory approval to acquire rights to in-process R&D projects through R&D collaborations, licensing arrangements or other asset acquisitions. Acquired IPR&D and milestones expense in the six months ended June 30, 2022 included a charge of $130 million as a result of acquiring Syndesi Therapeutics SA and its portfolio of novel modulators of the synaptic vesicle protein 2A, including its lead molecule SDI-118, which is being evaluated to target nerve terminals to enhance synaptic efficiency. There were no individually significant transactions during the three months ended June 30, 2022 and the three and six months ended June 30, 2021.

Other Operating Income

Other operating income for the three and six months ended June 30, 2022 included $172 million of income related to the sale of worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori. See Note 4 to the Condensed Consolidated Financial Statements for additional information. Other operating income for the three and six months ended June 30, 2021 included $68 million of income related to the sale of a biologics facility.

Other Non-Operating Expenses (Income)

						Three months ended June 30,												Six months ended June 30,
(in millions)						2022						2021						2022						2021
Interest expense						$	556					$	615					$	1,104					$	1,247
Interest income						(24)						(9)						(33)						(19)
Interest expense, net						$	532					$	606					$	1,071					$	1,228
Net foreign exchange loss						$	47					$	14					$	72					$	23
Other expense, net						1,533						2,658						757						2,263

Interest expense, net decreased for the three and six months ended June 30, 2022 compared to the prior year primarily due to a lower average debt balance as a result of deleveraging.

Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $1.6 billion for the three months and $861 million for the six months ended June 30, 2022 and $2.7 billion for the three months and $2.3 billion for the six months ended June 30, 2021. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including the probability of success of achieving regulatory/commercial milestones, discount rates, the estimated amount of future sales of the acquired products and other market-based factors. For the three and six months ended June 30, 2022, the change in fair value represented higher estimated Skyrizi sales driven by stronger market share uptake, partially offset by higher discount rates. For the three and six months ended June 30, 2021, the change in fair value represented higher estimated Skyrizi sales driven by stronger market share uptake, favorable Skyrizi clinical trial results and lower discount rates.

Income Tax Expense

The effective tax rate was 22% for the three months and 11% for the six months ended June 30, 2022 compared to 34% for the three months and 14% for the six months ended June 30, 2021. The effective tax rate in each period differed from the U.S. statutory tax rate of 21% principally due to the impact of foreign operations which reflects the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities and accretion on contingent consideration. The decrease in the effective tax rate for the three and six months ended June 30, 2022 over the prior year was primarily due to differences in the company’s jurisdictional mix of earnings and accretion on contingent consideration.

2022 Form 10-Q |			33

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

			Six months ended June 30,
(in millions)			2022						2021
Cash flows provided by (used in):
Operating activities			$	9,913					$	9,767
Investing activities			(1,461)						(584)
Financing activities			(9,651)						(9,058)

Operating cash flows for the six months ended June 30, 2022 increased compared to the prior year primarily due to improved results of operations resulting from revenue growth, partially offset by the timing of working capital cash flows.

Investing cash flows for the six months ended June 30, 2022 included payments made for net purchases of investment securities totaling $1.4 billion, acquisitions and investments of $394 million and capital expenditures of $305 million. Investing cash flows for the six months ended June 30, 2021 included capital expenditures of $383 million, payments made for acquisitions and investments of $345 million and net sales and maturities of investment securities totaling $9 million.

Financing cash flows for the six months ended June 30, 2022 included repayment of $2.9 billion aggregate principal amount of the company’s 3.45% senior notes. Additionally, financing cash flows included repayment of a $2.0 billion floating rate term loan due May 2025 and issuance of a new $2.0 billion floating rate term loan as part of the term loan refinancing in February 2022. Financing cash flows for the six months ended June 30, 2021 included repayment of $1.8 billion aggregate principal amount of the company’s 2.3% senior notes, €750 million aggregate principal amount of the company’s 0.5% senior euro notes and $750 million aggregate principal amount of floating rate senior notes.

Financing cash flows also included cash dividend payments of $5.0 billion for the six months ended June 30, 2022 and $4.6 billion for the six months ended June 30, 2021. The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.

On June 23, 2022, the company announced that its board of directors declared a quarterly cash dividend of $1.41 per share for stockholders of record at the close of business on July 15, 2022, payable on August 15, 2022. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.

The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. AbbVie repurchased 8 million shares for $1.1 billion during the six months ended June 30, 2022 and 5 million shares for $550 million during the six months ended June 30, 2021.

Credit Risk

AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.

Credit Facility, Access to Capital and Credit Ratings

Credit Facility

AbbVie currently has a $4.0 billion five-year revolving credit facility that matures in August 2024. This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At June 30, 2022, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. No amounts were outstanding under the company's credit facility as of June 30, 2022 and December 31, 2021.

2022 Form 10-Q |			34

Access to Capital

The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or has the ability to issue additional debt. The company’s ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company’s products or in the solvency of its customers or suppliers, deterioration in the company’s key financial ratios or credit ratings or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company’s growth objectives.

Credit Ratings

In March 2022, Moody’s Investors Service (Moody’s) affirmed its Baa2 senior unsecured long-term rating and the Prime-2 short-term rating. At the same time, Moody’s revised the outlook to positive from stable. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company’s ability to draw on its credit facility and would not result in an acceleration of scheduled maturities of any of the company’s outstanding debt.

CRITICAL ACCOUNTING POLICIES

A summary of the company’s significant accounting policies is included in Note 2, “Summary of Significant Accounting Policies” in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2021. There have been no significant changes in the company’s application of its critical accounting policies during the six months ended June 30, 2022.

FORWARD-LOOKING STATEMENTS

Some statements in this quarterly report on Form 10-Q may be forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions, among others, generally identify forward-looking statements. AbbVie cautions that these forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, failure to realize the expected benefits from AbbVie's acquisition of Allergan, failure to promptly and effectively integrate Allergan's businesses, challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action, changes to laws and regulations applicable to our industry and the impact of public health outbreaks, epidemics or pandemics, such as COVID-19. Additional information about the economic, competitive, governmental, technological and other factors that may affect AbbVie’s operations is set forth in Item 1A, “Risk Factors,” in AbbVie’s Annual Report on Form 10-K for the year ended December 31, 2021, which has been filed with the Securities and Exchange Commission. AbbVie notes these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995. AbbVie undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.