filings.toolsItem 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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Item 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Earnings (unaudited)
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | ||||||||||||||||||||||||
| Net revenues | $ | 12,310 | $ | 12,225 | ||||||||||||||||||||||
| Cost of products sold | 4,094 | 3,986 | ||||||||||||||||||||||||
| Selling, general and administrative | 3,315 | 3,039 | ||||||||||||||||||||||||
| Research and development | 1,939 | 2,292 | ||||||||||||||||||||||||
| Acquired IPR&D and milestones | 164 | 150 | ||||||||||||||||||||||||
| Other operating income | — | (10) | ||||||||||||||||||||||||
| Total operating costs and expenses | 9,512 | 9,457 | ||||||||||||||||||||||||
| Operating earnings | 2,798 | 2,768 | ||||||||||||||||||||||||
| Interest expense, net | 453 | 454 | ||||||||||||||||||||||||
| Net foreign exchange loss | 4 | 35 | ||||||||||||||||||||||||
| Other expense, net | 586 | 1,804 | ||||||||||||||||||||||||
| Earnings before income tax expense | 1,755 | 475 | ||||||||||||||||||||||||
| Income tax expense | 383 | 234 | ||||||||||||||||||||||||
| Net earnings | 1,372 | 241 | ||||||||||||||||||||||||
| Net earnings attributable to noncontrolling interest | 3 | 2 | ||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | 1,369 | $ | 239 | ||||||||||||||||||||||
| Per share data | ||||||||||||||||||||||||||
| Basic earnings per share attributable to AbbVie Inc. | $ | 0.77 | $ | 0.13 | ||||||||||||||||||||||
| Diluted earnings per share attributable to AbbVie Inc. | $ | 0.77 | $ | 0.13 | ||||||||||||||||||||||
| Weighted-average basic shares outstanding | 1,769 | 1,770 | ||||||||||||||||||||||||
| Weighted-average diluted shares outstanding | 1,773 | 1,776 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
2024 Form 10-Q |  | 1 |
AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Comprehensive Income (unaudited)
| Three months ended March 31, | |||||||||||||||||||||||
| (in millions) | 2024 | 2023 | |||||||||||||||||||||
| Net earnings | $ | 1,372 | $ | 241 | |||||||||||||||||||
| Foreign currency translation adjustments, net of tax expense (benefit) of $(20) for the three months ended March 31, 2024 and $12 for the three months ended March 31, 2023 | (396) | 194 | |||||||||||||||||||||
| Net investment hedging activities, net of tax expense (benefit) of $57 for the three months ended March 31, 2024 and $(60) for the three months ended March 31, 2023 | 207 | (224) | |||||||||||||||||||||
| Pension and post-employment benefits, net of tax expense (benefit) of $1 for the three months ended March 31, 2024 and $14 for the three months ended March 31, 2023 | 10 | 38 | |||||||||||||||||||||
| Cash flow hedging activities, net of tax expense (benefit) of $7 for the three months ended March 31, 2024 and $(4) for the three months ended March 31, 2023 | 30 | (41) | |||||||||||||||||||||
| Other comprehensive loss | (149) | (33) | |||||||||||||||||||||
| Comprehensive income | 1,223 | 208 | |||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest | 3 | 2 | |||||||||||||||||||||
| Comprehensive income attributable to AbbVie Inc. | $ | 1,220 | $ | 206 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2024 Form 10-Q | | 2 |
AbbVie Inc. and Subsidiaries Condensed Consolidated Balance Sheets
| (in millions, except share data) | March 31, 2024 | December 31, 2023 | |||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and equivalents | $ | 18,067 | $ | 12,814 | |||||||
| Short-term investments | 2 | 2 | |||||||||
| Accounts receivable, net | 11,949 | 11,155 | |||||||||
| Inventories | 4,245 | 4,099 | |||||||||
| Prepaid expenses and other | 4,608 | 4,932 | |||||||||
| Total current assets | 38,871 | 33,002 | |||||||||
| Investments | 305 | 304 | |||||||||
| Property and equipment, net | 4,980 | 4,989 | |||||||||
| Intangible assets, net | 62,225 | 55,610 | |||||||||
| Goodwill | 33,426 | 32,293 | |||||||||
| Other assets | 9,067 | 8,513 | |||||||||
| Total assets | $ | 148,874 | $ | 134,711 | |||||||
| Liabilities and Equity | |||||||||||
| Current liabilities | |||||||||||
| Short-term borrowings | $ | 3 | $ | — | |||||||
| Current portion of long-term debt and finance lease obligations | 10,193 | 7,191 | |||||||||
| Accounts payable and accrued liabilities | 31,326 | 30,650 | |||||||||
| Total current liabilities | 41,522 | 37,841 | |||||||||
| Long-term debt and finance lease obligations | 63,805 | 52,194 | |||||||||
| Deferred income taxes | 2,722 | 1,952 | |||||||||
| Other long-term liabilities | 32,778 | 32,327 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity | |||||||||||
| Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,829,957,662 shares issued as of March 31, 2024 and 1,823,046,087 as of December 31, 2023 | 18 | 18 | |||||||||
| Common stock held in treasury, at cost, 64,234,512 shares as of March 31, 2024 and 57,105,354 as of December 31, 2023 | (7,829) | (6,533) | |||||||||
| Additional paid-in capital | 20,656 | 20,180 | |||||||||
| Accumulated deficit | (2,384) | (1,000) | |||||||||
| Accumulated other comprehensive loss | (2,454) | (2,305) | |||||||||
| Total stockholders' equity | 8,007 | 10,360 | |||||||||
| Noncontrolling interest | 40 | 37 | |||||||||
| Total equity | 8,047 | 10,397 | |||||||||
| Total liabilities and equity | $ | 148,874 | $ | 134,711 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2024 Form 10-Q | | 3 |
AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Equity (unaudited)
| (in millions) | Common shares outstanding | Common stock | Treasury stock | Additional paid-in capital | Retained earnings (accumulated deficit) | Accumulated other comprehensive loss | Noncontrolling interest | Total | |||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | 1,769 | $ | 18 | $ | (4,594) | $ | 19,245 | $ | 4,784 | $ | (2,199) | $ | 33 | $ | 17,287 | ||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | — | — | — | 239 | — | — | 239 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | (33) | — | (33) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | (2,630) | — | — | (2,630) | |||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | (12) | — | (1,955) | — | — | — | — | (1,955) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | 7 | — | 25 | 374 | — | — | — | 399 | |||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | — | — | — | — | — | (4) | (4) | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2023 | 1,764 | $ | 18 | $ | (6,524) | $ | 19,619 | $ | 2,393 | $ | (2,232) | $ | 29 | $ | 13,303 | ||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | 1,766 | $ | 18 | $ | (6,533) | $ | 20,180 | $ | (1,000) | $ | (2,305) | $ | 37 | $ | 10,397 | ||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | — | — | — | 1,369 | — | — | 1,369 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | — | — | — | — | (149) | — | (149) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | (2,753) | — | — | (2,753) | |||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | (7) | — | (1,324) | — | — | — | — | (1,324) | |||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | 7 | — | 28 | 476 | — | — | — | 504 | |||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | — | — | — | — | — | 3 | 3 | |||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | 1,766 | $ | 18 | $ | (7,829) | $ | 20,656 | $ | (2,384) | $ | (2,454) | $ | 40 | $ | 8,047 | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2024 Form 10-Q | | 4 |
AbbVie Inc. and Subsidiaries Condensed Consolidated Statements of Cash Flows (unaudited)
| Three months ended March 31, | |||||||||||
| (in millions) (brackets denote cash outflows) | 2024 | 2023 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net earnings | $ | 1,372 | $ | 241 | |||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
| Depreciation | 183 | 179 | |||||||||
| Amortization of intangible assets | 1,891 | 1,948 | |||||||||
| Deferred income taxes | (389) | (267) | |||||||||
| Change in fair value of contingent consideration liabilities | 660 | 1,872 | |||||||||
| Payments of contingent consideration liabilities | (391) | (14) | |||||||||
| Stock-based compensation | 348 | 313 | |||||||||
| Acquired IPR&D and milestones | 164 | 150 | |||||||||
| Impairment of intangible assets | — | 710 | |||||||||
| Other, net | (45) | (128) | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable | (702) | (195) | |||||||||
| Inventories | (75) | (185) | |||||||||
| Prepaid expenses and other assets | 284 | (167) | |||||||||
| Accounts payable and other liabilities | 362 | (451) | |||||||||
| Income tax assets and liabilities, net | 378 | 187 | |||||||||
| Cash flows from operating activities | 4,040 | 4,193 | |||||||||
| Cash flows from investing activities | |||||||||||
| Acquisition of businesses, net of cash acquired | (9,199) | — | |||||||||
| Other acquisitions and investments | (190) | (353) | |||||||||
| Acquisitions of property and equipment | (193) | (175) | |||||||||
| Purchases of investment securities | (6) | (19) | |||||||||
| Sales and maturities of investment securities | 6 | 22 | |||||||||
| Other, net | (6) | 26 | |||||||||
| Cash flows from investing activities | (9,588) | (499) | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from issuance of other short-term borrowings | 5,008 | — | |||||||||
| Repayments of other short-term borrowings | (5,005) | — | |||||||||
| Proceeds from issuance of long-term debt | 14,963 | — | |||||||||
| Repayments of long-term debt and finance lease obligations | (103) | (1,351) | |||||||||
| Debt issuance costs | (99) | — | |||||||||
| Dividends paid | (2,772) | (2,661) | |||||||||
| Purchases of treasury stock | (1,324) | (1,955) | |||||||||
| Proceeds from the exercise of stock options | 127 | 65 | |||||||||
| Payments of contingent consideration liabilities | — | (311) | |||||||||
| Other, net | 24 | 21 | |||||||||
| Cash flows from financing activities | 10,819 | (6,192) | |||||||||
| Effect of exchange rate changes on cash and equivalents | (18) | 8 | |||||||||
| Net change in cash and equivalents | 5,253 | (2,490) | |||||||||
| Cash and equivalents, beginning of period | 12,814 | 9,201 | |||||||||
| Cash and equivalents, end of period | $ | 18,067 | $ | 6,711 | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2024 Form 10-Q | | 5 |
AbbVie Inc. and Subsidiaries
Notes to Condensed Consolidated Financial Statements (unaudited)
Note 1 Basis of Presentation
Basis of Historical Presentation
The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2023.
It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the company’s financial position and operating results. Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results. Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.
On February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen, Inc. (ImmunoGen). Refer to Note 4 and Note 8 for additional information regarding this acquisition.
Recent Accounting Pronouncements
Recent Accounting Pronouncements Not Yet Adopted
ASU No. 2023-09
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes - Improvements to Income Tax Disclosures (Topic 740). The standard requires disaggregation of the effective rate reconciliation into standard categories, enhances disclosure of income taxes paid, and modifies other income tax-related disclosures. The standard will be effective for AbbVie starting in annual periods in 2025, with early adoption permitted. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.
ASU No. 2023-07
In November 2023, the FASB issued ASU No. 2023-07 Segment Reporting - Improving Reportable Segment Disclosures (Topic 280). The standard requires disclosures to include significant segment expenses that are regularly provided to the chief operating decision maker (CODM), a description of other segment items by reportable segment, and any additional measures of a segment's profit or loss used by the CODM when deciding how to allocate resources. The ASU also requires all annual disclosures currently required by Topic 280 to be included in interim periods. The standard is effective for AbbVie starting in annual periods in 2024 and interim periods in 2025, with early adoption permitted and requires retrospective application to all prior periods presented in the financial statements. AbbVie is currently assessing the impact of adopting this guidance on its consolidated financial statements.
| 2024 Form 10-Q | | 6 |
Note 2 Supplemental Financial Information
Interest Expense, Net
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Interest expense | $ | 660 | $ | 553 | ||||||||||||||||||||||
| Interest income | (207) | (99) | ||||||||||||||||||||||||
| Interest expense, net | $ | 453 | $ | 454 |
Inventories
| (in millions) | March 31, 2024 | December 31, 2023 | |||||||||
| Finished goods | $ | 1,258 | $ | 1,356 | |||||||
| Work-in-process | 1,890 | 1,643 | |||||||||
| Raw materials | 1,097 | 1,100 | |||||||||
| Inventories | $ | 4,245 | $ | 4,099 |
Property and Equipment, Net
| (in millions) | March 31, 2024 | December 31, 2023 | |||||||||
| Property and equipment, gross | $ | 11,725 | $ | 11,635 | |||||||
| Accumulated depreciation | (6,745) | (6,646) | |||||||||
| Property and equipment, net | $ | 4,980 | $ | 4,989 |
Depreciation expense was $183 million for the three months ended March 31, 2024 and $179 million for the three months ended March 31, 2023.
| 2024 Form 10-Q | | 7 |
Note 3 Earnings Per Share
AbbVie grants certain restricted stock units (RSUs) that are considered to be participating securities. Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method was more dilutive.
The following table summarizes the impact of the two-class method:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | ||||||||||||||||||||||||
| Basic EPS | ||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | 1,369 | $ | 239 | ||||||||||||||||||||||
| Earnings allocated to participating securities | 10 | 11 | ||||||||||||||||||||||||
| Earnings available to common shareholders | $ | 1,359 | $ | 228 | ||||||||||||||||||||||
| Weighted-average basic shares outstanding | 1,769 | 1,770 | ||||||||||||||||||||||||
| Basic earnings per share attributable to AbbVie Inc. | $ | 0.77 | $ | 0.13 | ||||||||||||||||||||||
| Diluted EPS | ||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | 1,369 | $ | 239 | ||||||||||||||||||||||
| Earnings allocated to participating securities | 10 | 11 | ||||||||||||||||||||||||
| Earnings available to common shareholders | $ | 1,359 | $ | 228 | ||||||||||||||||||||||
| Weighted-average shares of common stock outstanding | 1,769 | 1,770 | ||||||||||||||||||||||||
| Effect of dilutive securities | 4 | 6 | ||||||||||||||||||||||||
| Weighted-average diluted shares outstanding | 1,773 | 1,776 | ||||||||||||||||||||||||
| Diluted earnings per share attributable to AbbVie Inc. | $ | 0.77 | $ | 0.13 |
Certain shares issuable under stock-based compensation plans were excluded from the computation of EPS because the effect would have been antidilutive. The number of common shares excluded was insignificant for all periods presented.
| 2024 Form 10-Q | | 8 |
Note 4 Licensing, Acquisitions and Other Arrangements
Acquisition of ImmunoGen, Inc.
On February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen. ImmunoGen is a commercial-stage biotechnology company focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients. ImmunoGen's oncology portfolio includes its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a pipeline of promising next-generation ADC's targeting hematologic malignancies and solid tumors. The combination accelerates AbbVie’s entry into the solid tumor space and strengthens its oncology pipeline. Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $31.26 per share in cash. The total fair value of the consideration transferred to owners of ImmunoGen common stock was $9.8 billion ($9.2 billion, net of cash acquired).
The acquisition of ImmunoGen has been accounted for as a business combination using the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The valuation of assets acquired and liabilities assumed has not yet been finalized as of March 31, 2024. As a result, AbbVie recorded preliminary estimates for the fair value of assets acquired and liabilities assumed as of the acquisition date. Finalization of the valuation during the measurement period could result in a change in the amounts recorded for the acquisition date fair value of intangible assets, goodwill and income taxes among other items. The completion of the valuation will occur no later than one year from the acquisition date.
The following table summarizes the preliminary fair value of assets acquired and liabilities assumed as of the acquisition date:
| (in millions) | |||||
| Assets acquired and liabilities assumed | |||||
| Cash and equivalents | $ | 591 | |||
| Accounts receivable | 171 | ||||
| Inventories | 211 | ||||
| Prepaid expenses and other current assets | 40 | ||||
| Property and equipment, net | 7 | ||||
| Intangible assets, net | |||||
| Developed product rights | 7,200 | ||||
| License agreements | 125 | ||||
| Acquired in-process research and development | 1,280 | ||||
| Other noncurrent assets | 273 | ||||
| Current portion of long-term debt | (99) | ||||
| Accounts payable and accrued liabilities | (312) | ||||
| Deferred income taxes | (899) | ||||
| Other long-term liabilities | (47) | ||||
| Total identifiable net assets | 8,541 | ||||
| Goodwill | 1,249 | ||||
| Total assets acquired and liabilities assumed | $ | 9,790 |
The fair value step-up adjustment to inventories of $179 million is being amortized to cost of products sold when the inventory is sold to customers, which is expected to be within approximately one year from the acquisition date.
Intangible assets relate to $7.3 billion of definite-lived intangible assets and $1.3 billion of acquired in-process research and development (IPR&D) associated with products that have not yet received regulatory approval. The acquired definite-lived intangible assets consist of developed product rights and license agreements and are being amortized over a weighted-average estimated useful life of approximately 12 years using the estimated pattern of economic benefit. The estimated fair values of identifiable intangible assets were determined using the "income approach" which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product, the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, competitive trends impacting the asset and each cash flow stream, as well as other factors.
| 2024 Form 10-Q | | 9 |
Other noncurrent assets primarily consist of $250 million of deferred tax assets.
The current portion of long-term debt assumed by AbbVie was repaid concurrent with the acquisition at the fair value of $99 million. See Note 8 for additional information.
Goodwill was calculated as the excess of the consideration transferred over the net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recognized from the acquisition of ImmunoGen represents expected synergies including, the ability to: (i) expand AbbVie’s product portfolio as well as the potential to increase revenue from future growth platforms, (ii) accelerate AbbVie’s clinical and commercial presence in the solid tumor space within oncology, (iii) leverage the respective strengths of each company, and (iv) enhance AbbVie’s existing ADC development efforts. The goodwill is not deductible for tax purposes.
Following the acquisition date, the operating results of ImmunoGen have been included in the condensed consolidated financial statements. For the period from the acquisition date through March 31, 2024, net revenues attributable to ImmunoGen were $91 million and operating losses attributable to ImmunoGen were $404 million, inclusive of $349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, $47 million of inventory fair value step-up amortization and $21 million of intangible asset amortization. AbbVie also issued 0.3 million RSUs to holders of ImmunoGen equity awards based on a conversion factor described in the transaction agreement. Stock compensation expense related to the issued RSUs during the three months ended March 31, 2024 was not significant.
Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $59 million for the three months ended March 31, 2024 and were included in selling, general and administrative (SG&A) expense in the condensed consolidated statements of earnings.
Pro Forma Financial Information
The following table presents the unaudited pro forma combined results of AbbVie and ImmunoGen for the three months ended March 31, 2024 and 2023 as if the acquisition of ImmunoGen had occurred on January 1, 2023:
| Three months ended March 31, | ||||||||
| (in millions) | 2024 | 2023 | ||||||
| Net revenues | $ | 12,365 | $ | 12,275 | ||||
| Net earnings (loss) | 1,739 | (413) |
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie and ImmunoGen. In order to reflect the occurrence of the acquisition on January 1, 2023 as required, the unaudited pro forma financial information includes adjustments to reflect incremental amortization expense to be incurred based on the current preliminary fair values of the identifiable intangible assets acquired; the incremental cost of products sold related to the fair value adjustments associated with acquisition date inventory; the additional interest expense associated with the issuance of debt to finance the acquisition; and the reclassification of acquisition-related costs incurred during the three months ended March 31, 2024 to the three months ended March 31, 2023. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisition been completed on January 1, 2023. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisition.
Proposed Acquisition of Cerevel Therapeutics Holdings, Inc.
On December 6, 2023, AbbVie announced that it entered into a definitive agreement under which AbbVie will acquire Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). Under the terms of the agreement, AbbVie will acquire all outstanding shares of Cerevel Therapeutics for $45.00 per share in cash for a total value of approximately $8.7 billion. The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions.
Cerevel Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of differentiated therapies for Neuroscience diseases. Cerevel Therapeutics neuroscience pipeline includes multiple clinical-stage and preclinical candidates with the potential to treat several diseases including schizophrenia, Parkinson's disease and mood disorders.
| 2024 Form 10-Q | | 10 |
Other Licensing & Acquisitions Activity
Cash outflows related to other acquisitions and investments totaled $190 million for the three months ended March 31, 2024 and $353 million for the three months ended March 31, 2023.
The following table summarizes acquired IPR&D and milestones expense:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Upfront charges | $ | 79 | $ | 132 | ||||||||||||||||||||||
| Development milestones | 85 | 18 | ||||||||||||||||||||||||
| Acquired IPR&D and milestones | $ | 164 | $ | 150 |
Note 5 Collaborations
The company has ongoing transactions with other entities through collaboration agreements. The following represent the significant collaboration agreements impacting the periods ended March 31, 2024 and 2023.
Collaboration with Janssen Biotech, Inc.
In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of Imbruvica, a novel, orally active, selective covalent inhibitor of Bruton’s tyrosine kinase and certain compounds structurally related to Imbruvica, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States.
The collaboration provides Janssen with an exclusive license to commercialize Imbruvica outside of the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for the development, manufacturing and marketing of any products generated as a result of the collaboration. The collaboration has no set duration or specific expiration date and provides for potential future development, regulatory and approval milestone payments of up to $200 million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately 60% of collaboration development costs and AbbVie is responsible for the remaining 40% of collaboration development costs.
In the United States, both parties have co-exclusive rights to commercialize the products; however, AbbVie is the principal in the end-customer product sales. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. Sales of Imbruvica are included in AbbVie's net revenues. Janssen's share of profits is included in AbbVie's cost of products sold. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.
Outside the United States, Janssen is responsible for and has exclusive rights to commercialize Imbruvica. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. AbbVie's share of profits is included in AbbVie's net revenues. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.
| 2024 Form 10-Q | | 11 |
The following table shows the profit and cost sharing relationship between Janssen and AbbVie:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| United States - Janssen's share of profits (included in cost of products sold) | $ | 283 | $ | 297 | ||||||||||||||||||||||
| International - AbbVie's share of profits (included in net revenues) | 228 | 240 | ||||||||||||||||||||||||
| Global - AbbVie's share of other costs (included in respective line items) | 42 | 55 |
AbbVie’s receivable from Janssen, included in accounts receivable, net, was $250 million at March 31, 2024 and $236 million at December 31, 2023. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $275 million at March 31, 2024 and $307 million at December 31, 2023.
Collaboration with Genentech, Inc.
AbbVie and Genentech, Inc. (Genentech), a member of the Roche Group, are parties to a collaboration and license agreement executed in 2007 to jointly research, develop and commercialize human therapeutic products containing BCL-2 inhibitors and certain other compound inhibitors which includes Venclexta, a BCL-2 inhibitor used to treat certain hematological malignancies. AbbVie shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States. AbbVie pays royalties on Venclexta net revenues outside the United States.
AbbVie manufactures and distributes Venclexta globally and is the principal in the end-customer product sales. Sales of Venclexta are included in AbbVie’s net revenues. Genentech’s share of United States profits is included in AbbVie’s cost of products sold. AbbVie records sales and marketing costs associated with the United States collaboration as part of SG&A expenses and global development costs as part of research and development (R&D) expenses, net of Genentech’s share. Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.
The following table shows the profit and cost sharing relationship between Genentech and AbbVie:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Genentech's share of profits, including royalties (included in cost of products sold) | $ | 227 | $ | 202 | ||||||||||||||||||||||
| AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A) | 9 | 11 | ||||||||||||||||||||||||
| AbbVie's share of development costs (included in R&D) | 19 | 28 |
Note 6 Goodwill and Intangible Assets
Goodwill
The following table summarizes the changes in the carrying amount of goodwill:
| (in millions) | |||||
| Balance as of December 31, 2023 | $ | 32,293 | |||
| Additions(a) | 1,249 | ||||
| Foreign currency translation adjustments | (116) | ||||
| Balance as of March 31, 2024 | $ | 33,426 |
(a) Goodwill additions related to the acquisition of ImmunoGen (see Note 4).
The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist. As of March 31, 2024, there were no accumulated goodwill impairment losses.
| 2024 Form 10-Q | | 12 |
Intangible Assets, Net
The following table summarizes intangible assets:
| March 31, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| (in millions) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||||||||||||||||||
| Definite-lived intangible assets | |||||||||||||||||||||||||||||||||||
| Developed product rights | $ | 82,219 | $ | (24,059) | $ | 58,160 | $ | 75,142 | $ | (22,455) | $ | 52,687 | |||||||||||||||||||||||
| License agreements | 8,316 | (5,831) | 2,485 | 8,191 | (5,571) | 2,620 | |||||||||||||||||||||||||||||
| Total definite-lived intangible assets | 90,535 | (29,890) | 60,645 | 83,333 | (28,026) | 55,307 | |||||||||||||||||||||||||||||
| Indefinite-lived intangible assets | 1,580 | — | 1,580 | 303 | — | 303 | |||||||||||||||||||||||||||||
| Total intangible assets, net | $ | 92,115 | $ | (29,890) | $ | 62,225 | $ | 83,636 | $ | (28,026) | $ | 55,610 |
Definite-Lived Intangible Assets
The increase in definite-lived intangible assets during 2024 was primarily due to the acquisition of ImmunoGen. The intangible assets will be amortized using the estimated pattern of economic benefit. Refer to Note 4 for additional information regarding the acquisition.
Amortization expense was $1.9 billion for the three months ended March 31, 2024 and 2023. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist. The increase in indefinite-lived intangible assets during 2024 was primarily due to the acquisition of ImmunoGen. Refer to Note 4 for additional information regarding the acquisition.
During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients. This decision contributed to a delay in the estimated timing of regulatory approval as well as a significant decrease in estimated future cash flows of the product and represented a triggering event which required the company to evaluate the underlying indefinite-lived intangible asset for impairment. The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $630 million to research and development expense in the condensed consolidated statements of earnings for the first quarter of 2023.
| 2024 Form 10-Q | | 13 |
Note 7 Restructuring Plans
AbbVie continuously evaluates its operations to identify opportunities to optimize its manufacturing and R&D operations, commercial infrastructure and administrative costs and to respond to changes in its business environment. As a result, AbbVie management periodically approves individual restructuring plans to achieve these objectives. As of March 31, 2024 and 2023, no such plans were individually significant. Restructuring charges were $15 million for the three months ended March 31, 2024 and $27 million for the three months ended March 31, 2023. These charges are recorded in cost of products sold, R&D expense and SG&A expense in the condensed consolidated statements of earnings based on the classification of the affected employees or the related operations.
The following table summarizes the cash activity in the restructuring reserve for the three months ended March 31, 2024:
| (in millions) | |||||
| Accrued balance as of December 31, 2023 | $ | 196 | |||
| Restructuring charges | 14 | ||||
| Payments and other adjustments | (32) | ||||
| Accrued balance as of March 31, 2024 | $ | 178 |
Allergan Integration Plan
Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $2.5 billion through December 31, 2023. These costs consisted of severance and employee benefit costs (cash severance, non-cash severance including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses. The Allergan integration plan was substantially complete as of December 31, 2023 and the remaining accrual as of March 31, 2024 is not significant.
The following table summarizes the prior year charges associated with the Allergan acquisition integration plan:
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cost of products sold | $ | 14 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Research and development | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 44 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total charges | $ | 58 |
Note 8 Financial Instruments and Fair Value Measures
Risk Management Policy
See Note 11 to the company’s Annual Report on Form 10-K for the year ended December 31, 2023 for a summary of AbbVie’s risk management policy and use of derivative instruments.
Financial Instruments
Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling $1.1 billion at March 31, 2024 and $1.8 billion at December 31, 2023, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than 18 months. Accumulated gains and losses as of March 31, 2024 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.
In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was recognized in AOCI. This gain is reclassified to interest expense, net over the term of the related debt.
| 2024 Form 10-Q | | 14 |
The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling $6.2 billion at March 31, 2024 and $7.9 billion at December 31, 2023.
The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of €5.4 billion at March 31, 2024 and December 31, 2023. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling €4.9 billion, SEK1.4 billion, CAD750 million and CHF50 million at March 31, 2024 and December 31, 2023. The company uses the spot method of assessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.
The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $5.0 billion at March 31, 2024 and December 31, 2023. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.
No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.
The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets:
| Fair value – Derivatives in asset position | Fair value – Derivatives in liability position | ||||||||||||||||||||||
| (in millions) | Balance sheet caption | March 31, 2024 | December 31, 2023 | Balance sheet caption | March 31, 2024 | December 31, 2023 | |||||||||||||||||
| Foreign currency forward exchange contracts | |||||||||||||||||||||||
| Designated as cash flow hedges | Prepaid expenses and other | $ | 30 | $ | 12 | Accounts payable and accrued liabilities | $ | 4 | $ | 32 | |||||||||||||
| Designated as net investment hedges | Prepaid expenses and other | 53 | 13 | Accounts payable and accrued liabilities | 38 | 66 | |||||||||||||||||
| Designated as net investment hedges | Other assets | 6 | — | Other long-term liabilities | 3 | 69 | |||||||||||||||||
| Not designated as hedges | Prepaid expenses and other | 10 | 41 | Accounts payable and accrued liabilities | 25 | 36 | |||||||||||||||||
| Interest rate swap contracts | |||||||||||||||||||||||
| Designated as fair value hedges | Prepaid expenses and other | — | — | Accounts payable and accrued liabilities | 1 | — | |||||||||||||||||
| Designated as fair value hedges | Other assets | — | — | Other long-term liabilities | 357 | 293 | |||||||||||||||||
| Total derivatives | $ | 99 | $ | 66 | $ | 428 | $ | 496 |
While certain derivatives are subject to netting arrangements with the company’s counterparties, the company does not offset derivative assets and liabilities within the condensed consolidated balance sheets.
| 2024 Form 10-Q | | 15 |
The following table presents the pre-tax amounts of gains (losses) from derivative instruments recognized in other comprehensive loss:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Foreign currency forward exchange contracts | ||||||||||||||||||||||||||
| Designated as cash flow hedges | $ | 55 | $ | (9) | ||||||||||||||||||||||
| Designated as net investment hedges | 134 | (94) |
Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $50 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $23 million into interest expense, net for treasury rate lock agreement cash flow hedges during the next 12 months.
Related to AbbVie’s non-derivative, foreign currency denominated debt designated as net investment hedges, the company recognized in other comprehensive loss pre-tax gains of $157 million for the three months ended March 31, 2024 and pre-tax losses of $162 million for the three months ended March 31, 2023.
The following table summarizes the pre-tax amounts and location of derivative instrument net gains (losses) recognized in the condensed consolidated statements of earnings, including the net gains (losses) reclassified out of AOCI into net earnings. See Note 10 for the amount of net gains (losses) reclassified out of AOCI.
| Three months ended March 31, | |||||||||||||||||||||||||||||
| (in millions) | Statement of earnings caption | 2024 | 2023 | ||||||||||||||||||||||||||
| Foreign currency forward exchange contracts | |||||||||||||||||||||||||||||
| Designated as cash flow hedges | Cost of products sold | $ | 12 | $ | 30 | ||||||||||||||||||||||||
| Designated as net investment hedges | Interest expense, net | 27 | 28 | ||||||||||||||||||||||||||
| Not designated as hedges | Net foreign exchange loss | (18) | 30 | ||||||||||||||||||||||||||
| Treasury rate lock agreements designated as cash flow hedges | Interest expense, net | 6 | 6 | ||||||||||||||||||||||||||
| Interest rate swap contracts | |||||||||||||||||||||||||||||
| Designated as fair value hedges | Interest expense, net | (65) | 35 | ||||||||||||||||||||||||||
| Debt designated as hedged item in fair value hedges | Interest expense, net | 65 | (35) |
Fair Value Measures
The fair value hierarchy consists of the following three levels:
-
Level 1 – Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;
-
Level 2 – Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
-
Level 3 – Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company’s management about the assumptions market participants would use in pricing the asset or liability.
| 2024 Form 10-Q | | 16 |
The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of March 31, 2024:
| Basis of fair value measurement | |||||||||||||||||||||||
| (in millions) | Total | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and equivalents | $ | 18,067 | $ | 7,221 | $ | 10,846 | $ | — | |||||||||||||||
| Money market funds and time deposits | 10 | — | 10 | — | |||||||||||||||||||
| Debt securities | 26 | — | 26 | — | |||||||||||||||||||
| Equity securities | 110 | 84 | 26 | — | |||||||||||||||||||
| Foreign currency contracts | 99 | — | 99 | — | |||||||||||||||||||
| Total assets | $ | 18,312 | $ | 7,305 | $ | 11,007 | $ | — | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swap contracts | $ | 358 | $ | — | $ | 358 | $ | — | |||||||||||||||
| Foreign currency contracts | 70 | — | 70 | — | |||||||||||||||||||
| Contingent consideration | 20,159 | — | — | 20,159 | |||||||||||||||||||
| Total liabilities | $ | 20,587 | $ | — | $ | 428 | $ | 20,159 |
The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the condensed consolidated balance sheet as of December 31, 2023:
| Basis of fair value measurement | |||||||||||||||||||||||
| (in millions) | Total | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||
| Assets | |||||||||||||||||||||||
| Cash and equivalents | $ | 12,814 | $ | 6,223 | $ | 6,591 | $ | — | |||||||||||||||
| Money market funds and time deposits | 10 | — | 10 | — | |||||||||||||||||||
| Debt securities | 26 | — | 26 | — | |||||||||||||||||||
| Equity securities | 111 | 86 | 25 | — | |||||||||||||||||||
| Foreign currency contracts | 66 | — | 66 | — | |||||||||||||||||||
| Total assets | $ | 13,027 | $ | 6,309 | $ | 6,718 | $ | — | |||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swap contracts | $ | 293 | $ | — | $ | 293 | $ | — | |||||||||||||||
| Foreign currency contracts | 203 | — | 203 | — | |||||||||||||||||||
| Contingent consideration | 19,890 | — | — | 19,890 | |||||||||||||||||||
| Total liabilities | $ | 20,386 | $ | — | $ | 496 | $ | 19,890 |
Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies.
The fair value measurements of the contingent consideration liabilities were determined based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is
| 2024 Form 10-Q | | 17 |
employed in determining the appropriateness of certain of these inputs. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.
The fair value of the company's contingent consideration liabilities was calculated using the following significant unobservable inputs:
| March 31, 2024 | December 31, 2023 | ||||||||||||||||
| Range | Weighted average**(a)** | Range | Weighted average**(a)** | ||||||||||||||
| Discount rate | 4.6% - 5.8% | 4.8% | 4.3%- 5.9% | 4.5% | |||||||||||||
| Probability of payment for royalties by indication(b) | 89% - 100% | 99% | 89% - 100% | 99% | |||||||||||||
| Projected year of payments | 2024 - 2034 | 2030 | 2024 - 2034 | 2027 |
(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration liabilities.
(b) Excluding approved indications, the estimated probability of payment was 89% at March 31, 2024 and December 31, 2023.
There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy. The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:
| Three months ended March 31, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| Beginning balance | $ | 19,890 | $ | 16,384 | ||||||||||
| Change in fair value recognized in net earnings | 660 | 1,872 | ||||||||||||
| Payments | (391) | (325) | ||||||||||||
| Ending balance | $ | 20,159 | $ | 17,931 |
The change in fair value recognized in net earnings is recorded in other expense, net in the condensed consolidated statements of earnings. Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the condensed consolidated statements of cash flows.
Certain financial instruments are carried at historical cost or some basis other than fair value. The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of March 31, 2024 are shown in the table below:
| Basis of fair value measurement | ||||||||||||||||||||||||||
| (in millions) | Book value | Approximate fair value | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Short-term borrowings | $ | 3 | $ | 3 | $ | — | $ | 3 | $ | — | ||||||||||||||||
| Current portion of long-term debt and finance lease obligations, excluding fair value hedges | 10,194 | 10,021 | 9,687 | 334 | — | |||||||||||||||||||||
| Long-term debt and finance lease obligations, excluding fair value hedges | 64,140 | 60,887 | 60,469 | 418 | — | |||||||||||||||||||||
| Total liabilities | $ | 74,337 | $ | 70,911 | $ | 70,156 | $ | 755 | $ | — |
| 2024 Form 10-Q | | 18 |
The book values, approximate fair values and bases used to measure the approximate fair values of certain financial instruments as of December 31, 2023 are shown in the table below:
| Basis of fair value measurement | ||||||||||||||||||||||||||
| (in millions) | Book value | Approximate fair value | Quoted prices in active markets for identical assets (Level 1) | Significant other observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Current portion of long-term debt and finance lease obligations, excluding fair value hedges | $ | 7,191 | $ | 7,069 | $ | 6,862 | $ | 207 | $ | — | ||||||||||||||||
| Long-term debt and finance lease obligations, excluding fair value hedges | 52,460 | 49,541 | 48,983 | 558 | — | |||||||||||||||||||||
| Total liabilities | $ | 59,651 | $ | 56,610 | $ | 55,845 | $ | 765 | $ | — |
AbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $161 million as of March 31, 2024 and $159 million as of December 31, 2023. No significant cumulative upward or downward adjustments have been recorded for these investments as of March 31, 2024.
Concentrations of Risk
Of total net accounts receivable, three U.S. wholesalers accounted for 79% as of March 31, 2024 and 81% as of December 31, 2023, and substantially all of AbbVie’s pharmaceutical product net revenues in the United States were to these three wholesalers.
Debt and Credit Facilities
Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions
In connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics, in February, 2024, the company issued $15.0 billion aggregate principal amount of unsecured senior notes. The notes are unsecured, unsubordinated obligations of AbbVie and will rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium. AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $99 million and debt discounts totaled $37 million, which are being amortized over the respective terms of the notes to interest expense, net in the condensed consolidated statements of earnings.
AbbVie used the net proceeds received from the issuance of the notes to finance the acquisition of ImmunoGen, repay its term-loan, repay commercial paper borrowings, pay fees and expenses in respect of the foregoing, finance general corporate purposes and expects, together with cash on hand, to fund AbbVie’s proposed acquisition of Cerevel Therapeutics. See Note 4 for additional information.
| 2024 Form 10-Q | | 19 |
The following table summarizes issued debt in connection with the acquisition of ImmunoGen and proposed acquisition of Cerevel Therapeutics:
| (in millions) | March 31, 2024 | |||||||||||||
| Senior Notes | ||||||||||||||
| 4.80% Senior Notes due 2027 | $ | 2,250 | ||||||||||||
| 4.80% Senior Notes due 2029 | 2,500 | |||||||||||||
| 4.95% Senior Notes due 2031 | 2,000 | |||||||||||||
| 5.05% Senior Notes due 2034 | 3,000 | |||||||||||||
| 5.35% Senior Notes due 2044 | 750 | |||||||||||||
| 5.40% Senior Notes due 2054 | 3,000 | |||||||||||||
| 5.50% Senior Notes due 2064 | 1,500 | |||||||||||||
| Total acquired debt outstanding | $ | 15,000 |
In December 2023, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and $5.0 billion 364-day term loan credit agreement. In February, 2024, AbbVie borrowed and repaid $5.0 billion under the term loan credit agreement. Interest charged on this borrowing was based on Secured Overnight Financing Rate Reference Rate (SOFR) +0.975% with an effective interest rate of 6.29%. Subsequent to the $15.0 billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024. In February 2024, concurrent with the acquisition, the company assumed and repaid an ImmunoGen senior secured term loan at a fair value of $99 million.
Long-Term Debt Repayments
In January 2023, the company repaid a $1.0 billion floating rate three-year term loan that was scheduled to mature in May 2023. In March 2023, the company repaid a $350 million aggregate principal amount of 2.80% senior notes at maturity.
Short-Term Borrowings
During the three months ended March 31, 2024, the company issued and redeemed $1.7 billion of commercial paper. There were no commercial paper borrowings outstanding as of March 31, 2024 and December 31, 2023. The weighted average interest rate on commercial paper borrowings was 5.54% for the three months ended March 31, 2024.
In March 2023, AbbVie entered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This amended facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At March 31, 2024, 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 facilities as of March 31, 2024 and December 31, 2023.
| 2024 Form 10-Q | | 20 |
Note 9 Post-Employment Benefits
The following table summarizes net periodic benefit cost relating to the company’s defined benefit and other post-employment plans:
| Defined benefit plans | Other post- employment plans | ||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, | Three months ended March 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||
| Service cost | $ | 72 | $ | 68 | $ | 11 | $ | 8 | |||||||||||||||||||||||||||||||||||||||
| Interest cost | 113 | 107 | 10 | 9 | |||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | (197) | (180) | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of prior service credit | — | — | (9) | (9) | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of actuarial loss | 13 | 4 | 4 | 3 | |||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost | $ | 1 | $ | (1) | $ | 16 | $ | 11 |
The components of net periodic benefit cost other than service cost are included in other expense, net in the condensed consolidated statements of earnings.
Note 10 Equity
Stock-Based Compensation
Stock-based compensation expense is principally related to awards issued pursuant to the AbbVie 2013 Incentive Stock Program and the AbbVie Amended and Restated 2013 Incentive Stock Program and is summarized as follows:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Cost of products sold | $ | 22 | $ | 20 | ||||||||||||||||||||||
| Research and development | 133 | 117 | ||||||||||||||||||||||||
| Selling, general and administrative | 193 | 176 | ||||||||||||||||||||||||
| Pre-tax compensation expense | 348 | 313 | ||||||||||||||||||||||||
| Tax benefit | 60 | 55 | ||||||||||||||||||||||||
| After-tax compensation expense | $ | 288 | $ | 258 |
In addition to stock-based compensation expense included in the table above and in connection with the acquisition of ImmunoGen, AbbVie incurred $349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, of which $192 million was recorded in SG&A expenses, $126 million was recorded in R&D expenses and $31 million was recorded in cost of products sold in the condensed consolidated statements of earnings for the three months ended March 31, 2024. Refer to Note 4 for additional information regarding the ImmunoGen acquisition.
Stock Options
During the three months ended March 31, 2024, primarily in connection with the company's annual grant, AbbVie granted 0.6 million stock options with a weighted-average grant-date fair value of $31.53. As of March 31, 2024, $11 million of unrecognized compensation cost related to stock options is expected to be recognized as expense over approximately the next two years.
RSUs and Performance Shares
During the three months ended March 31, 2024, primarily in connection with the company's annual grant, AbbVie granted 4.9 million RSUs and performance shares with a weighted-average grant-date fair value of $175.97. In connection with the ImmunoGen acquisition, during the first quarter of 2024, AbbVie issued 0.3 million RSUs to holders of ImmunoGen equity awards based on a conversion factor described in the transaction agreement. Refer to Note 4 for additional information regarding the ImmunoGen acquisition. As of March 31, 2024, $967 million of unrecognized compensation cost related to RSUs and performance shares is expected to be recognized as expense over approximately the next two years.
| 2024 Form 10-Q | | 21 |
Cash Dividends
The following table summarizes quarterly cash dividends declared during 2024 and 2023:
| 2024 | 2023 | |||||||||||||||||||||||||||||||
| Date Declared | Payment Date | Dividend Per Share | Date Declared | Payment Date | Dividend Per Share | |||||||||||||||||||||||||||
| 02/15/24 | 05/15/24 | $ | 1.55 | 10/26/23 | 02/15/24 | $ | 1.55 | |||||||||||||||||||||||||
| 09/08/23 | 11/15/23 | $ | 1.48 | |||||||||||||||||||||||||||||
| 06/22/23 | 08/15/23 | $ | 1.48 | |||||||||||||||||||||||||||||
| 02/16/23 | 05/15/23 | $ | 1.48 |
Stock Repurchase Program
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. Shares repurchased under this program are recorded at acquisition cost, including related expenses, and are available for general corporate purposes.
On February 16, 2023, AbbVie’s board of directors authorized a $5.0 billion increase to the existing stock repurchase authorization. AbbVie repurchased 5 million shares for $959 million during the three months ended March 31, 2024 and 10 million shares for $1.6 billion during the three months ended March 31, 2023. AbbVie's remaining stock repurchase authorization was approximately $3.9 billion as of March 31, 2024.
Accumulated Other Comprehensive Loss
The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2024:
| (in millions) | Foreign currency translation adjustments | Net investment hedging activities | Pension and post-employment benefits | Cash flow hedging activities | Total | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2023 | $ | (1,106) | $ | 65 | $ | (1,488) | $ | 224 | $ | (2,305) | |||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | (396) | 228 | 3 | 44 | (121) | ||||||||||||||||||||||||||||||
| Net losses (gains) reclassified from accumulated other comprehensive loss | — | (21) | 7 | (14) | (28) | ||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | (396) | 207 | 10 | 30 | (149) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2024 | $ | (1,502) | $ | 272 | $ | (1,478) | $ | 254 | $ | (2,454) |
Other comprehensive loss for the three months ended March 31, 2024 included foreign currency translation adjustments totaling a loss of $396 million principally due to the impact of the weakening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a gain of $207 million.
The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the three months ended March 31, 2023:
| (in millions) | Foreign currency translation adjustments | Net investment hedging activities | Pension and post-employment benefits | Cash flow hedging activities | Total | ||||||||||||||||||||||||||||||
| Balance as of December 31, 2022 | $ | (1,513) | $ | 464 | $ | (1,458) | $ | 308 | $ | (2,199) | |||||||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | 194 | (202) | 40 | (10) | 22 | ||||||||||||||||||||||||||||||
| Net gains reclassified from accumulated other comprehensive loss | — | (22) | (2) | (31) | (55) | ||||||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | 194 | (224) | 38 | (41) | (33) | ||||||||||||||||||||||||||||||
| Balance as of March 31, 2023 | $ | (1,319) | $ | 240 | $ | (1,420) | $ | 267 | $ | (2,232) |
Other comprehensive loss for the three months ended March 31, 2023 included foreign currency translation adjustments totaling a gain of $194 million principally due to the impact of the strengthening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling a loss of $224 million.
| 2024 Form 10-Q | | 22 |
The following table presents the impact on AbbVie’s condensed consolidated statements of earnings for significant amounts reclassified out of each component of accumulated other comprehensive loss:
| Three months ended March 31, | |||||||||||||||||||||||
| (in millions) (brackets denote gains) | 2024 | 2023 | |||||||||||||||||||||
| Net investment hedging activities | |||||||||||||||||||||||
| Gains on derivative amount excluded from effectiveness testing(a) | $ | (27) | $ | (28) | |||||||||||||||||||
| Tax expense | 6 | 6 | |||||||||||||||||||||
| Total reclassifications, net of tax | $ | (21) | $ | (22) | |||||||||||||||||||
| Pension and post-employment benefits | |||||||||||||||||||||||
| Amortization of actuarial losses (gains) and other(b) | $ | 8 | $ | (2) | |||||||||||||||||||
| Tax benefit | (1) | — | |||||||||||||||||||||
| Total reclassifications, net of tax | $ | 7 | $ | (2) | |||||||||||||||||||
| Cash flow hedging activities | |||||||||||||||||||||||
| Gains on foreign currency forward exchange contracts(c) | $ | (12) | $ | (30) | |||||||||||||||||||
| Gains on treasury rate lock agreements(a) | (6) | (6) | |||||||||||||||||||||
| Tax expense | 4 | 5 | |||||||||||||||||||||
| Total reclassifications, net of tax | $ | (14) | $ | (31) |
(a) Amounts are included in interest expense, net (see Note 8).
(b) Amounts are included in the computation of net periodic benefit cost (see Note 9).
(c) Amounts are included in cost of products sold (see Note 8).
Note 11 Income Taxes
The effective tax rate was 22% for the three months ended March 31, 2024 compared to 49% for the three months ended March 31, 2023. 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, changes in fair value of contingent consideration and business development activities, including ImmunoGen acquisition-related costs. The decrease in the effective tax rate for the three months ended March 31, 2024 over the prior year was primarily due to changes in fair value of contingent consideration and impairment of certain intangible assets in the prior year.
It is reasonably possible that the company’s gross unrecognized tax benefits balance may change within the next 12 months by up to $162 million. The company has various federal, state and foreign examinations ongoing. Finalizing examinations with the relevant taxing authorities can include formal administrative and legal proceedings, and as a result, we cannot reasonably estimate the timing of resolution for certain unrecognized tax benefits.
Note 12 Legal Proceedings and Contingencies
AbbVie is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. The most significant matters are described below. Loss contingency provisions are recorded for probable losses at management’s best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. For litigation matters discussed below for which a loss is probable or reasonably possible, the company is unable to estimate the possible loss or range of loss, if any, beyond the amounts accrued. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.
Subject to certain exceptions specified in the separation agreement by and between Abbott Laboratories (Abbott) and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.
| 2024 Form 10-Q | | 23 |
Antitrust Litigation
Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. The lawsuits pending in federal court consist of six individual plaintiff lawsuits and a certified class action by Niaspan direct purchasers. The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated pre-trial proceedings under the MDL Rules as In re: Niaspan Antitrust Litigation, MDL No. 2460. In October 2016, the Orange County, California District Attorney’s Office filed a lawsuit on behalf of the State of California regarding the Niaspan patent litigation settlement in Orange County Superior Court, asserting a claim under the unfair competition provision of the California Business and Professions Code seeking injunctive relief, restitution, civil penalties and attorneys’ fees.
In August 2019, direct purchasers of AndroGel filed a lawsuit, King Drug Co. of Florence, Inc., et al. v. AbbVie Inc., et al., against AbbVie and others in the United States District Court for the Eastern District of Pennsylvania, alleging that 2006 patent litigation settlements and related agreements by Solvay Pharmaceuticals, Inc. (a company Abbott acquired in February 2010 and now known as AbbVie Products LLC) with three generic companies violated federal antitrust law, and also alleging that 2011 patent litigation by Abbott with two generic companies regarding AndroGel was sham litigation and the settlements of those litigations violated federal antitrust law. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees. In November 2022, the State of Oregon filed a lawsuit in the Multnomah County, Oregon Circuit Court making similar allegations regarding the 2011 patent litigation with one of the generic companies.
Lawsuits were filed against Forest Laboratories, LLC and others generally alleging that 2012 and 2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys’ fees. The lawsuits, purported class actions filed on behalf of direct and indirect purchasers of Bystolic, were consolidated as In re: Bystolic Antitrust Litigation in the United States District Court for the Southern District of New York. In February 2023, the court granted Forest Laboratories’ motion to dismiss the cases, dismissing them with prejudice. Plaintiffs are appealing the court’s motion to dismiss ruling.
Government Proceedings
Lawsuits are pending against Allergan and several other manufacturers generally alleging that they improperly promoted and sold prescription opioid products. Approximately 580 lawsuits are pending against Allergan in federal and state courts. Most of the federal court lawsuits are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re: National Prescription Opiate Litigation, MDL No. 2804. Approximately 130 of the lawsuits are pending in various state courts. The plaintiffs in these lawsuits, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages. Of these approximately 580 lawsuits, approximately 165 of them are brought by states, counties, cities, and other municipal entities, approximately 125 of which are in the process of being dismissed pursuant to the previously announced settlement for which AbbVie recorded a charge of $2.1 billion to selling, general and administrative expense in the consolidated statement of earnings in the second quarter of 2022.
In March 2023, AbbVie Inc. filed a petition in the United States Tax Court, AbbVie Inc. and Subsidiaries v. Commissioner of Internal Revenue. The petition disputes the Internal Revenue Service determination concerning a $572 million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination.
Shareholder and Securities Litigation
In October 2018, a federal securities lawsuit, Holwill v. AbbVie Inc., et al., was filed in the United States District Court for the Northern District of Illinois against AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for Humira sales growth in financial filings between 2013 and 2018 were misleading because they omitted alleged misconduct in connection with Humira patient and reimbursement support services and other services and items of value that allegedly induced Humira prescriptions. In September 2021, the court granted plaintiffs' motion to certify a class.
Lawsuits were filed against Allergan and certain of its former officers alleging they made misrepresentations and omissions regarding Allergan's textured breast implants. The lawsuits, which were filed by Allergan shareholders, have been consolidated in the United States District Court for the Southern District of New York as In re: Allergan plc Securities Litigation. The plaintiffs generally seek compensatory damages and attorneys’ fees. In September 2019, the court partially granted Allergan's motion to dismiss. In September 2021, the court granted plaintiffs' motion to certify a class. In December 2022, the court granted Allergan's motion for
| 2024 Form 10-Q | | 24 |
summary judgment on the remaining claims, dismissing them with prejudice. In February 2024, the United States Court of Appeals for the Second Circuit affirmed the district court’s dismissals.
In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v. Gonzalez et al., and Katcher v. Gonzalez, et al., were filed in the United States District Court for the Northern District of Illinois, alleging that certain AbbVie directors and officers breached fiduciary and other legal duties in making or allowing alleged misstatements regarding the potential effect that safety information about another company’s product would have on the Food and Drug Administration’s approval and labeling for AbbVie’s Rinvoq.
Product Liability and General Litigation
In April 2023, a putative class action lawsuit, Camargo v. AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois on behalf of Humira patients who paid for Humira based on its list price or who, after losing insurance coverage, discontinued Humira because they could not pay based on its list price, alleging that Humira’s list price is excessive in violation of multiple states’ unfair and deceptive trade practices statutes. The plaintiff generally seeks monetary damages, injunctive relief, and attorneys’ fees.
In 2018, a qui tam lawsuit, U.S. ex rel. Silbersher v. Allergan Inc., et al., was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S. Patent Office resulted in false claims for payment being made to federal and state healthcare payors for Namenda XR and Namzaric. The plaintiff-relator sought damages and attorneys' fees under the federal False Claims Act and state law analogues. The federal government and state governments declined to intervene in the lawsuit. In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-relator’s federal law claims with prejudice and state law claims without prejudice. The plaintiff-relator is appealing the court’s motion to dismiss ruling.
Intellectual Property Litigation
AbbVie Inc. is seeking to enforce patent rights relating to venetoclax (a drug sold under the trademark Venclexta). Litigation was filed in the United States District Court for the District of Delaware in July 2020 against Dr. Reddy’s Laboratories, Ltd. and Dr. Reddy’s Laboratories, Inc.; and Alembic Pharmaceuticals Ltd., Alembic Pharmaceuticals, Inc., and Alembic Global Holdings SA. AbbVie alleges defendants’ proposed generic venetoclax products infringe certain patents and seeks declaratory and injunctive relief. Genentech, Inc., which is in a global collaboration with AbbVie concerning the development and marketing of Venclexta, is the co-plaintiff in this suit.
AbbVie Inc. is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq). Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc. Sandoz Private Limited, Sandoz GMBH, Intas Pharmaceuticals Ltd., Accord Healthcare, Inc., and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.
AbbVie Inc. is seeking to enforce patent rights related to ubrogepant (a drug sold under the trademark Ubrelvy). Litigation was filed in the United States District Court for the District of New Jersey in March 2024 against Aurobindo Pharma U.S.A., Inc., Aurobindo Pharma Limited, and Apitoria Pharma Private Limited; Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Limited; MSN Pharmaceuticals Inc., MSN Laboratories Private Limited, and MSN Life Sciences Private Limited; and Hetero USA Inc., Hetero Labs Limited Unit-III, and Hetero Labs Limited. AbbVie alleges defendants’ proposed generic ubrogepant products infringe certain patents and seeks declaratory and injunctive relief. Merck Sharp & Dohme LLC, which exclusively licenses certain patents to AbbVie, is a co-plaintiff in the litigation.
| 2024 Form 10-Q | | 25 |
Note 13 Segment Information
AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialization and sale of innovative medicines and therapies. This operating structure enables the Chief Executive Officer, as chief operating decision maker (CODM), to allocate resources and assess business performance on a global basis in order to achieve established long-term strategic goals. Consistent with this structure, a global research and development and supply chain organization is responsible for the discovery, manufacturing and supply of products. Commercial efforts that coordinate the marketing, sales and distribution of these products are organized by geographic region or therapeutic area. All of these activities are supported by a global corporate administrative staff. The determination of a single business segment is consistent with the consolidated financial information regularly reviewed by the CODM for purposes of assessing performance, allocating resources and planning and forecasting future periods.
The following table details AbbVie’s worldwide net revenues:
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Immunology | ||||||||||||||||||||||||||
| Humira | United States | $ | 1,771 | $ | 2,948 | |||||||||||||||||||||
| International | 499 | 593 | ||||||||||||||||||||||||
| Total | $ | 2,270 | $ | 3,541 | ||||||||||||||||||||||
| Skyrizi | United States | $ | 1,656 | $ | 1,139 | |||||||||||||||||||||
| International | 352 | 221 | ||||||||||||||||||||||||
| Total | $ | 2,008 | $ | 1,360 | ||||||||||||||||||||||
| Rinvoq | United States | $ | 725 | $ | 449 | |||||||||||||||||||||
| International | 368 | 237 | ||||||||||||||||||||||||
| Total | $ | 1,093 | $ | 686 | ||||||||||||||||||||||
| Oncology | ||||||||||||||||||||||||||
| Imbruvica | United States | $ | 610 | $ | 638 | |||||||||||||||||||||
| Collaboration revenues | 228 | 240 | ||||||||||||||||||||||||
| Total | $ | 838 | $ | 878 | ||||||||||||||||||||||
| Venclexta | United States | $ | 281 | $ | 265 | |||||||||||||||||||||
| International | 333 | 273 | ||||||||||||||||||||||||
| Total | $ | 614 | $ | 538 | ||||||||||||||||||||||
| Elahere(a) | United States | $ | 64 | $ | — | |||||||||||||||||||||
| Epkinly | Collaboration Revenues | $ | 22 | $ | — | |||||||||||||||||||||
| International | 5 | — | ||||||||||||||||||||||||
| Total | $ | 27 | $ | — | ||||||||||||||||||||||
| Aesthetics | ||||||||||||||||||||||||||
| Botox Cosmetic | United States | $ | 389 | $ | 409 | |||||||||||||||||||||
| International | 244 | 250 | ||||||||||||||||||||||||
| Total | $ | 633 | $ | 659 | ||||||||||||||||||||||
| Juvederm Collection | United States | $ | 106 | $ | 122 | |||||||||||||||||||||
| International | 191 | 233 | ||||||||||||||||||||||||
| Total | $ | 297 | $ | 355 | ||||||||||||||||||||||
| Other Aesthetics | United States | $ | 281 | $ | 246 | |||||||||||||||||||||
| International | 38 | 40 | ||||||||||||||||||||||||
| Total | $ | 319 | $ | 286 | ||||||||||||||||||||||
| Neuroscience | ||||||||||||||||||||||||||
| Botox Therapeutic | United States | $ | 611 | $ | 587 | |||||||||||||||||||||
| International | 137 | 132 | ||||||||||||||||||||||||
| Total | $ | 748 | $ | 719 | ||||||||||||||||||||||
| Vraylar | United States | $ | 692 | $ | 560 | |||||||||||||||||||||
| International | 2 | 1 | ||||||||||||||||||||||||
| Total | $ | 694 | $ | 561 |
| 2024 Form 10-Q | | 26 |
| Three months ended March 31, | ||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||||||||||||||
| Duodopa | United States | $ | 25 | $ | 25 | |||||||||||||||||||||
| International | 90 | 93 | ||||||||||||||||||||||||
| Total | $ | 115 | $ | 118 | ||||||||||||||||||||||
| Ubrelvy | United States | $ | 197 | $ | 150 | |||||||||||||||||||||
| International | 6 | 2 | ||||||||||||||||||||||||
| Total | $ | 203 | $ | 152 | ||||||||||||||||||||||
| Qulipta | United States | $ | 128 | $ | 66 | |||||||||||||||||||||
| International | 3 | — | ||||||||||||||||||||||||
| Total | $ | 131 | $ | 66 | ||||||||||||||||||||||
| Other Neuroscience | United States | $ | 61 | $ | 75 | |||||||||||||||||||||
| International | 13 | 4 | ||||||||||||||||||||||||
| Total | $ | 74 | $ | 79 | ||||||||||||||||||||||
| Eye Care | ||||||||||||||||||||||||||
| Ozurdex | United States | $ | 34 | $ | 39 | |||||||||||||||||||||
| International | 97 | 76 | ||||||||||||||||||||||||
| Total | 131 | 115 | ||||||||||||||||||||||||
| Lumigan/Ganfort | United States | $ | 29 | $ | 63 | |||||||||||||||||||||
| International | 62 | 67 | ||||||||||||||||||||||||
| Total | $ | 91 | $ | 130 | ||||||||||||||||||||||
| Alphagan/Combigan | United States | $ | 15 | $ | 28 | |||||||||||||||||||||
| International | 44 | 43 | ||||||||||||||||||||||||
| Total | $ | 59 | $ | 71 | ||||||||||||||||||||||
| Restasis | United States | $ | 44 | $ | 79 | |||||||||||||||||||||
| International | 13 | 13 | ||||||||||||||||||||||||
| Total | $ | 57 | $ | 92 | ||||||||||||||||||||||
| Other Eye Care | United States | $ | 105 | $ | 110 | |||||||||||||||||||||
| International | 95 | 90 | ||||||||||||||||||||||||
| Total | $ | 200 | $ | 200 | ||||||||||||||||||||||
| Other Key Products | ||||||||||||||||||||||||||
| Mavyret | United States | $ | 144 | $ | 171 | |||||||||||||||||||||
| International | 205 | 193 | ||||||||||||||||||||||||
| Total | $ | 349 | $ | 364 | ||||||||||||||||||||||
| Creon | United States | $ | 285 | $ | 305 | |||||||||||||||||||||
| Linzess/Constella | United States | $ | 257 | $ | 251 | |||||||||||||||||||||
| International | 9 | 8 | ||||||||||||||||||||||||
| Total | $ | 266 | $ | 259 | ||||||||||||||||||||||
| All other | $ | 744 | $ | 691 | ||||||||||||||||||||||
| Total net revenues | $ | 12,310 | $ | 12,225 |
(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.
| 2024 Form 10-Q | | 27 |
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