SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2024
OR
For the transition period from to
Commission File Number: 001-35565
| (Exact name of registrant as specified in its charter) | ||||||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification number) | |||||||
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.
| ☒ | 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 | ||||||||||||
As of July 29, 2024, AbbVie Inc. had 1,766,343,745 shares of common stock at $0.01 par value outstanding.
AbbVie Inc. and Subsidiaries
Table of Contents
| Page | ||||||||
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
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) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Net revenues | $ | $ | $ | $ | ||||||||||||||||||||||
| Cost of products sold | ||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Acquired IPR&D and milestones | ||||||||||||||||||||||||||
| Other operating income | ( | ( | ||||||||||||||||||||||||
| Total operating costs and expenses | ||||||||||||||||||||||||||
| Operating earnings | ||||||||||||||||||||||||||
| Interest expense, net | ||||||||||||||||||||||||||
| Net foreign exchange loss | ||||||||||||||||||||||||||
| Other expense, net | ||||||||||||||||||||||||||
| Earnings before income tax expense | ||||||||||||||||||||||||||
| Income tax expense | ||||||||||||||||||||||||||
| Net earnings | ||||||||||||||||||||||||||
| Net earnings attributable to noncontrolling interest | ||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Per share data | ||||||||||||||||||||||||||
| Basic earnings per share attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted earnings per share attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average basic shares outstanding | ||||||||||||||||||||||||||
| Weighted-average diluted shares outstanding | ||||||||||||||||||||||||||
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)
Condensed Consolidated Statements of Comprehensive Income (unaudited)
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net earnings | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency translation adjustments, net of tax expense (benefit) of $( | ( | ( | ( | ||||||||||||||||||||
Net investment hedging activities, net of tax expense (benefit) of $ | ( | ||||||||||||||||||||||
Pension and post-employment benefits, net of tax expense (benefit) of $ | ( | ||||||||||||||||||||||
Cash flow hedging activities, net of tax expense (benefit) of $( | ( | ( | |||||||||||||||||||||
| Other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||
| Comprehensive income | |||||||||||||||||||||||
| Comprehensive income attributable to noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income attributable to AbbVie Inc. | $ | $ | $ | $ | |||||||||||||||||||
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
Condensed Consolidated Balance Sheets
| (in millions, except share data) | June 30, 2024 | December 31, 2023 | |||||||||
| (unaudited) | |||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and equivalents | $ | $ | |||||||||
| Short-term investments | |||||||||||
| Accounts receivable, net | |||||||||||
| Inventories | |||||||||||
| Prepaid expenses and other | |||||||||||
| Total current assets | |||||||||||
| Investments | |||||||||||
| Property and equipment, net | |||||||||||
| Intangible assets, net | |||||||||||
| Goodwill | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| Liabilities and Equity | |||||||||||
| Current liabilities | |||||||||||
| Current portion of long-term debt and finance lease obligations | $ | $ | |||||||||
| Accounts payable and accrued liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt and finance lease obligations | |||||||||||
| Deferred income taxes | |||||||||||
| Other long-term liabilities | |||||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity | |||||||||||
Common stock, $ | |||||||||||
Common stock held in treasury, at cost, | ( | ( | |||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total stockholders' equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities and equity | $ | $ | |||||||||
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)
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 March 31, 2023 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2022 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2023 | $ | $ | ( | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2023 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Purchases of treasury stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation plans and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Change in noncontrolling interest | — | ||||||||||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2024 | $ | $ | ( | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||
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)
Condensed Consolidated Statements of Cash Flows (unaudited)
| Six months ended June 30, | |||||||||||
| (in millions) (brackets denote cash outflows) | 2024 | 2023 | |||||||||
| Cash flows from operating activities | |||||||||||
| Net earnings | $ | $ | |||||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
| Depreciation | |||||||||||
| Amortization of intangible assets | |||||||||||
| Deferred income taxes | ( | ( | |||||||||
| Change in fair value of contingent consideration liabilities | |||||||||||
| Payments of contingent consideration liabilities | ( | ( | |||||||||
| Stock-based compensation | |||||||||||
| Acquired IPR&D and milestones | |||||||||||
| Non-cash litigation reserve adjustments, net of cash payments | ( | ||||||||||
| Impairment of intangible assets | |||||||||||
| Other, net | ( | ( | |||||||||
| Changes in operating assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Prepaid expenses and other assets | |||||||||||
| Accounts payable and other liabilities | ( | ||||||||||
| Income tax assets and liabilities, net | ( | ( | |||||||||
| Cash flows from operating activities | |||||||||||
| Cash flows from investing activities | |||||||||||
| Acquisition of businesses, net of cash acquired | ( | ||||||||||
| Other acquisitions and investments | ( | ( | |||||||||
| Acquisitions of property and equipment | ( | ( | |||||||||
| Purchases of investment securities | ( | ( | |||||||||
| Sales and maturities of investment securities | |||||||||||
| Other, net | ( | ||||||||||
| Cash flows from investing activities | ( | ( | |||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from issuance of other short-term borrowings | |||||||||||
| Repayments of other short-term borrowings | ( | ||||||||||
| Proceeds from issuance of long-term debt | — | ||||||||||
| Repayments of long-term debt and finance lease obligations | ( | ( | |||||||||
| Debt issuance costs | ( | ||||||||||
| Dividends paid | ( | ( | |||||||||
| Purchases of treasury stock | ( | ( | |||||||||
| Proceeds from the exercise of stock options | |||||||||||
| Payments of contingent consideration liabilities | ( | ||||||||||
| Other, net | |||||||||||
| Cash flows from financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash and equivalents | ( | ( | |||||||||
| Net change in cash and equivalents | ( | ||||||||||
| Cash and equivalents, beginning of period | |||||||||||
| Cash and equivalents, end of period | $ | $ | |||||||||
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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Interest expense | $ | $ | $ | $ | ||||||||||||||||||||||
| Interest income | ( | ( | ( | ( | ||||||||||||||||||||||
| Interest expense, net | $ | $ | $ | $ | ||||||||||||||||||||||
Inventories
| (in millions) | June 30, 2024 | December 31, 2023 | |||||||||
| Finished goods | $ | $ | |||||||||
| Work-in-process | |||||||||||
| Raw materials | |||||||||||
| Inventories | $ | $ | |||||||||
Property and Equipment, Net
| (in millions) | June 30, 2024 | December 31, 2023 | |||||||||
| Property and equipment, gross | $ | $ | |||||||||
| Accumulated depreciation | ( | ( | |||||||||
| Property and equipment, net | $ | $ | |||||||||
Depreciation expense was $184 million for the three months and $367 million for the six months ended June 30, 2024 and $190 million for the three months and $369 million for the six months ended June 30, 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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions, except per share data) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Basic EPS | ||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings allocated to participating securities | ||||||||||||||||||||||||||
| Earnings available to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average basic shares outstanding | ||||||||||||||||||||||||||
| Basic earnings per share attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Diluted EPS | ||||||||||||||||||||||||||
| Net earnings attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
| Earnings allocated to participating securities | ||||||||||||||||||||||||||
| Earnings available to common shareholders | $ | $ | $ | $ | ||||||||||||||||||||||
| Weighted-average shares of common stock outstanding | ||||||||||||||||||||||||||
| Effect of dilutive securities | ||||||||||||||||||||||||||
| Weighted-average diluted shares outstanding | ||||||||||||||||||||||||||
| Diluted earnings per share attributable to AbbVie Inc. | $ | $ | $ | $ | ||||||||||||||||||||||
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.
Note 4 Licensing, Acquisitions and Other Arrangements
Acquisition of Cerevel Therapeutics Holdings, Inc.
Subsequent to June 30, 2024, on August 1, 2024, AbbVie completed its previously announced acquisition of Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). Under the terms of the agreement, AbbVie acquired all outstanding shares of Cerevel Therapeutics for $45.00 per share in cash for a total value of approximately $8.7 billion.
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.
Due to the proximity of the closing date of the acquisition to the date of filing this Quarterly Report on Form 10-Q, the initial accounting for the acquisition is not complete. Significant, relevant information needed to complete the initial accounting, including the identification and measurement of the fair value of assets acquired and liabilities assumed, is pending. As a result, it is not practicable to disclose the preliminary allocation of the purchase price to assets acquired and liabilities assumed or provide other related disclosures. The accounting impact of this acquisition and the operating results of Cerevel Therapeutics will be included in the consolidated financial statements beginning in the third quarter of 2024.
2024 Form 10-Q | | 8 | ||||
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 June 30, 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 | $ | ||||
| Accounts receivable | |||||
| Inventories | |||||
| Prepaid expenses and other current assets | |||||
| Property and equipment, net | |||||
| Intangible assets, net | |||||
| Developed product rights | |||||
| License agreements | |||||
| Acquired in-process research and development | |||||
| Other noncurrent assets | |||||
| Current portion of long-term debt | ( | ||||
| Accounts payable and accrued liabilities | ( | ||||
| Deferred income taxes | ( | ||||
| Other long-term liabilities | ( | ||||
| Total identifiable net assets | |||||
| Goodwill | |||||
| Total assets acquired and liabilities assumed | $ | ||||
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.
Other noncurrent assets primarily consist of $250 million of deferred tax assets.
2024 Form 10-Q | | 9 | ||||
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 fair value of 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 June 30, 2024, net revenues attributable to ImmunoGen were $239 million and operating losses attributable to ImmunoGen were $562 million, inclusive of $349 million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, $124 million of inventory fair value step-up amortization and $65 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 RSUs issued at the acquisition date was not significant.
Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $59 million for the six months ended June 30, 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 and six months ended June 30, 2024 and 2023 as if the acquisition of ImmunoGen had occurred on January 1, 2023:
| Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Net revenues | $ | $ | $ | $ | |||||||||||||
| Net earnings | |||||||||||||||||
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 and six months ended June 30, 2024 to the six months ended June 30, 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.
2024 Form 10-Q | | 10 | ||||
Other Licensing & Acquisitions Activity
Cash outflows related to other acquisitions and investments totaled $1.0 billion for the six months ended June 30, 2024 and $513 million for the six months ended June 30, 2023.
The following table summarizes acquired IPR&D and milestones expense:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
(in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Upfront charges | $ | $ | $ | $ | ||||||||||||||||||||||
| Development milestones | ||||||||||||||||||||||||||
| Acquired IPR&D and milestones | $ | $ | $ | $ | ||||||||||||||||||||||
Celsius Therapeutics, Inc.
In June 2024, AbbVie acquired Celsius Therapeutics, Inc. (Celsius Therapeutics) including its lead pipeline asset CEL383. Celsius Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of precision medicine in inflammatory bowel disease. The transaction was accounted as an asset acquisition as CEL383 represented substantially all of the fair value of the gross assets acquired. The upfront payment of $250 million was recorded in acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the second quarter of 2024.
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 June 30, 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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| United States - Janssen's share of profits (included in cost of products sold) | $ | $ | $ | $ | ||||||||||||||||||||||
| International - AbbVie's share of profits (included in net revenues) | ||||||||||||||||||||||||||
| Global - AbbVie's share of other costs (included in respective line items) | ||||||||||||||||||||||||||
AbbVie’s receivable from Janssen, included in accounts receivable, net, was $256 million at June 30, 2024 and $236 million at December 31, 2023. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $270 million at June 30, 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.
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Genentech's share of profits, including royalties (included in cost of products sold) | $ | $ | $ | $ | ||||||||||||||||||||||
| AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A) | ||||||||||||||||||||||||||
| AbbVie's share of development costs (included in R&D) | ||||||||||||||||||||||||||
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 | $ | ||||
Additions(a) | |||||
| Foreign currency translation adjustments | ( | ||||
| Balance as of June 30, 2024 | $ | ||||
The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist. As of June 30, 2024, there were no accumulated goodwill impairment losses.
2024 Form 10-Q | | 12 | ||||
Intangible Assets, Net
The following table summarizes intangible assets:
| June 30, 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 | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
| License agreements | ( | ( | |||||||||||||||||||||||||||||||||
| Total definite-lived intangible assets | ( | ( | |||||||||||||||||||||||||||||||||
| Indefinite-lived intangible assets | — | — | |||||||||||||||||||||||||||||||||
| Total intangible assets, net | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||
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 and $3.8 billion for the six months ended June 30, 2024 and $2.1 billion for the three months and $4.0 billion for the six months ended June 30, 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.
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 June 30, 2024 and 2023, no such plans were individually significant. Restructuring charges were $49 million for the three months and $64 million for the six months ended June 30, 2024 and $18 million for the three months and $45 million for the six months ended June 30, 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 six months ended June 30, 2024:
| (in millions) | |||||
| Accrued balance as of December 31, 2023 | $ | ||||
| Restructuring charges | |||||
| Payments and other adjustments | ( | ||||
| Accrued balance as of June 30, 2024 | $ | ||||
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 June 30, 2024 is not significant.
The following table summarizes the prior year charges associated with the Allergan acquisition integration plan:
| (in millions) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | |||||||||
| Cost of products sold | $ | $ | |||||||||
| Research and development | |||||||||||
| Selling, general and administrative | |||||||||||
| Total charges | $ | $ | |||||||||
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 $1.3 billion at June 30, 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 June 30, 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 | ||||
In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 with a notional amount totaling €433 million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates. The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S. dollars. The unrealized gains and losses on the contract were included in AOCI and reclassified to net foreign exchange loss over the term of the related debt.
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 $8.6 billion at June 30, 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 €3.2 billion at June 30, 2024 and €5.4 billion at December 31, 2023. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling €7.1 billion, SEK1.9 billion, CAD750 million and CHF70 million at June 30, 2024 and €4.9 billion, SEK1.4 billion, CAD750 million and CHF50 million at 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 $3.5 billion at June 30, 2024 and $5.0 billion at 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.
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 | June 30, 2024 | December 31, 2023 | Balance sheet caption | June 30, 2024 | December 31, 2023 | |||||||||||||||||
| Foreign currency forward exchange contracts | |||||||||||||||||||||||
| Designated as cash flow hedges | Prepaid expenses and other | $ | $ | Accounts payable and accrued liabilities | $ | $ | |||||||||||||||||
| Designated as cash flow hedges | Other assets | Other long-term liabilities | |||||||||||||||||||||
| Designated as net investment hedges | Prepaid expenses and other | Accounts payable and accrued liabilities | |||||||||||||||||||||
| Designated as net investment hedges | Other assets | Other long-term liabilities | |||||||||||||||||||||
| Not designated as hedges | Prepaid expenses and other | Accounts payable and accrued liabilities | |||||||||||||||||||||
| Interest rate swap contracts | |||||||||||||||||||||||
| Designated as fair value hedges | Other assets | Other long-term liabilities | |||||||||||||||||||||
| Total derivatives | $ | $ | $ | $ | |||||||||||||||||||
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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Foreign currency forward exchange contracts | ||||||||||||||||||||||||||
| Designated as cash flow hedges | $ | $ | $ | $ | ||||||||||||||||||||||
| Designated as net investment hedges | ( | |||||||||||||||||||||||||
| Cross-currency swap contracts designated as cash flow hedges | ||||||||||||||||||||||||||
Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $55 million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $22 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 $50 million for the three months and $207 million for the six months ended June 30, 2024 and pre-tax gains of $36 million for the three months and pre-tax losses of $126 million for the six months ended June 30, 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 June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||
| (in millions) | Statement of earnings caption | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||
| Foreign currency forward exchange contracts | |||||||||||||||||||||||||||||
| Designated as cash flow hedges | $ | $ | $ | $ | |||||||||||||||||||||||||
| Designated as net investment hedges | |||||||||||||||||||||||||||||
| Not designated as hedges | |||||||||||||||||||||||||||||
| Treasury rate lock agreements designated as cash flow hedges | |||||||||||||||||||||||||||||
| Cross-currency swap contracts designated as cash flow hedges | |||||||||||||||||||||||||||||
| Interest rate swap contracts | |||||||||||||||||||||||||||||
| Designated as fair value hedges | ( | ( | |||||||||||||||||||||||||||
| Debt designated as hedged item in fair value hedges | Interest expense, net | ( | ( | ||||||||||||||||||||||||||
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 June 30, 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 | $ | $ | $ | $ | |||||||||||||||||||
| Debt securities | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swap contracts | $ | $ | $ | $ | |||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
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 | $ | $ | $ | $ | |||||||||||||||||||
| Debt securities | |||||||||||||||||||||||
| Equity securities | |||||||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | |||||||||||||||||||
| Liabilities | |||||||||||||||||||||||
| Interest rate swap contracts | $ | $ | $ | $ | |||||||||||||||||||
| Foreign currency contracts | |||||||||||||||||||||||
| Contingent consideration | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
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:
| June 30, 2024 | December 31, 2023 | ||||||||||||||||
| Range | Weighted average(a) | Range | Weighted average(a) | ||||||||||||||
| Discount rate | |||||||||||||||||
Probability of payment for royalties by indication(b) | |||||||||||||||||
| Projected year of payments | |||||||||||||||||
(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
There have been no The following table presents the changes in fair value of total contingent consideration liabilities which are measured using Level 3 inputs:
| Six months ended June 30, | ||||||||||||||
| (in millions) | 2024 | 2023 | ||||||||||||
| Beginning balance | $ | $ | ||||||||||||
| Change in fair value recognized in net earnings | ||||||||||||||
| Payments | ( | ( | ||||||||||||
| Ending balance | $ | $ | ||||||||||||
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 June 30, 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 | ||||||||||||||||||||||||||
| Current portion of long-term debt and finance lease obligations, excluding fair value hedges | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Long-term debt and finance lease obligations, excluding fair value hedges | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||
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 | $ | $ | $ | $ | $ | |||||||||||||||||||||
| Long-term debt and finance lease obligations, excluding fair value hedges | ||||||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | $ | |||||||||||||||||||||
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 $160 million as of June 30, 2024 and $159 million as of December 31, 2023. No significant cumulative upward or downward adjustments have been recorded for these investments as of June 30, 2024.
Concentrations of Risk
Of total net accounts receivable, three U.S. wholesalers accounted for 77 % as of June 30, 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 acquisitions of ImmunoGen and 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, together with cash on hand, fund AbbVie’s 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 acquisitions of ImmunoGen and Cerevel Therapeutics:
| (in millions) | ||||||||||||||
Senior Notes | ||||||||||||||
| 4.80% Senior Notes due 2027 | $ | |||||||||||||
| 4.80% Senior Notes due 2029 | ||||||||||||||
| 4.95% Senior Notes due 2031 | ||||||||||||||
| 5.05% Senior Notes due 2034 | ||||||||||||||
| 5.35% Senior Notes due 2044 | ||||||||||||||
| 5.40% Senior Notes due 2054 | ||||||||||||||
| 5.50% Senior Notes due 2064 | ||||||||||||||
| Total debt issued | $ | |||||||||||||
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 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 May 2024, the company repaid a €1.5 billion aggregate principal amount of 1.38 % senior euro notes at maturity.
In June 2024, the company repaid a €700 million aggregate principal amount of 1.25 % senior euro notes and $1.0 billion aggregate principal amount of 3.85 % senior notes at maturity.
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.
In May 2023, the company repaid $1.0 billion aggregate principal amount of 2.85 % senior notes at maturity.
Short-Term Borrowings
During the six months ended June 30, 2024, the company issued and redeemed $1.7 no 5.54 % for the six months ended June 30, 2024.
In March 2023, AbbVie entered into an amended and restated five-year 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 June 30, 2024, the company was in compliance with all covenants, and commitment fees under the credit facility were insignificant. No
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 June 30, | Six months ended June 30, | Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||
| Service cost | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Interest cost | |||||||||||||||||||||||||||||||||||||||||||||||
| Expected return on plan assets | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of prior service cost (credit) | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||
| Amortization of actuarial loss | |||||||||||||||||||||||||||||||||||||||||||||||
| Net periodic benefit cost | $ | $ | ( | $ | $ | ( | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Cost of products sold | $ | $ | $ | $ | ||||||||||||||||||||||
| Research and development | ||||||||||||||||||||||||||
| Selling, general and administrative | ||||||||||||||||||||||||||
| Pre-tax compensation expense | ||||||||||||||||||||||||||
| Tax benefit | ( | ( | ( | ( | ||||||||||||||||||||||
| After-tax compensation expense | $ | $ | $ | $ | ||||||||||||||||||||||
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 six months ended June 30, 2024. Refer to Note 4 for additional information regarding the ImmunoGen acquisition.
Stock Options
During the six months ended June 30, 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 June 30, 2024, $9 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 six months ended June 30, 2024, primarily in connection with the company's annual grant, AbbVie granted 5.0 million RSUs and performance shares with a weighted-average grant-date fair value of $176.13 . 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 June 30, 2024, $840 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 | $ | 10/26/23 | 02/15/24 | $ | |||||||||||||||||||||||||||
| 06/21/24 | 08/15/24 | $ | 09/08/23 | 11/15/23 | $ | |||||||||||||||||||||||||||
| 06/22/23 | 08/15/23 | $ | ||||||||||||||||||||||||||||||
| 02/16/23 | 05/15/23 | $ | ||||||||||||||||||||||||||||||
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 six months ended June 30, 2024 and 10 million shares for $1.6 billion during the six months ended June 30, 2023. AbbVie's remaining stock repurchase authorization was approximately $3.9 billion as of June 30, 2024.
Accumulated Other Comprehensive Loss
The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 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 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Net losses (gains) reclassified from accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||
| Balance as of June 30, 2024 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Other comprehensive loss for the six months ended June 30, 2024 included foreign currency translation adjustments totaling a loss of $553 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 $291 million.
The following table summarizes the changes in each component of accumulated other comprehensive loss, net of tax, for the six months ended June 30, 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 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||||||||
| Net gains reclassified from accumulated other comprehensive loss | ( | ( | ( | ( | |||||||||||||||||||||||||
| Net current-period other comprehensive income (loss) | ( | ( | ( | ||||||||||||||||||||||||||
| Balance as of June 30, 2023 | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
Other comprehensive loss for the six months ended June 30, 2023 included foreign currency translation adjustments totaling a gain of $178 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 $213 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 June 30, | Six months ended June 30, | ||||||||||||||||||||||
| (in millions) (brackets denote gains) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Net investment hedging activities | |||||||||||||||||||||||
Gains on derivative amount excluded from effectiveness testing(a) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Tax expense | |||||||||||||||||||||||
| Total reclassifications, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Pension and post-employment benefits | |||||||||||||||||||||||
Amortization of actuarial losses (gains) and other(b) | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Tax benefit | ( | ( | |||||||||||||||||||||
| Total reclassifications, net of tax | $ | $ | ( | $ | $ | ( | |||||||||||||||||
| Cash flow hedging activities | |||||||||||||||||||||||
Gains on foreign currency forward exchange contracts(c) | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Gains on treasury rate lock agreements(a) | ( | ( | ( | ( | |||||||||||||||||||
Gains on cross-currency swap contracts(d) | ( | ( | |||||||||||||||||||||
Tax expense | |||||||||||||||||||||||
| Total reclassifications, net of tax | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(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).
(d) Amounts are included in net foreign exchange loss (see Note 8).
Note 11 Income Taxes
The effective tax rate was 36 % for the three months and 30 % for the six months ended June 30, 2024 compared to 22 % for the three months and 26 % for the six months ended June 30, 2023. The effective tax rate in each period differed from the U.S. statutory tax rate of 21
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.
2024 Form 10-Q | | 23 | ||||
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.
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 federal multi-district litigation (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. In May 2024, the United States Court of Appeals for the Second Circuit affirmed that dismissal.
Government Proceedings
Lawsuits are pending against Allergan and several other manufacturers generally alleging that they improperly promoted and sold prescription opioid products. Approximately 460 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 52 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 460 lawsuits, approximately 45 of them are brought by states, counties, cities, and other municipal entities, approximately 25 of which are in the process of being dismissed pursuant to the previously announced
2024 Form 10-Q | | 24 | ||||
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.
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.
Lawsuits are pending against various Allergan entities in the United States and other countries including Brazil, Canada, South Korea, and the Netherlands, in which plaintiffs generally allege that they developed, or may develop, breast implant-associated anaplastic large cell lymphoma (ALCL) or other injuries from Allergan’s Biocell® textured breast implants, which were voluntarily withdrawn from worldwide markets in 2019. Approximately 130 ALCL lawsuits and 1,000 other lawsuits are coordinated for pre-trial purposes in the United States District Court for the District of New Jersey under the MDL rules as In re: Allergan Biocell Textured Breast Implant Product Liability Litigation, MDL No. 2921. Approximately 75 ALCL lawsuits and 460 other lawsuits are pending in various state courts. Approximately 50 ALCL and 800 other lawsuits are pending in other countries. Plaintiffs generally seek monetary damages, medical monitoring, and attorneys’ fees.
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, and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.
2024 Form 10-Q | | 25 | ||||
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 | | 26 | ||||
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 June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Immunology | ||||||||||||||||||||||||||
| Humira | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Skyrizi | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Rinvoq | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Oncology | ||||||||||||||||||||||||||
| Imbruvica | United States | $ | $ | $ | $ | |||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Venclexta | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
Elahere(a) | United States | $ | $ | $ | $ | |||||||||||||||||||||
| Epkinly | $ | $ | $ | $ | ||||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Aesthetics | ||||||||||||||||||||||||||
| Botox Cosmetic | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Juvederm Collection | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Aesthetics | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Neuroscience | ||||||||||||||||||||||||||
| Botox Therapeutic | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Vraylar | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
2024 Form 10-Q | | 27 | ||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Duodopa | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Ubrelvy | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Qulipta | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Neuroscience | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Eye Care | ||||||||||||||||||||||||||
| Ozurdex | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Lumigan/Ganfort | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Alphagan/Combigan | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Restasis | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Eye Care | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Other Key Products | ||||||||||||||||||||||||||
| Mavyret | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Creon | United States | $ | $ | $ | $ | |||||||||||||||||||||
| Linzess/Constella | United States | $ | $ | $ | $ | |||||||||||||||||||||
| International | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| All other | $ | $ | $ | $ | ||||||||||||||||||||||
| Total net revenues | $ | $ | $ | $ | ||||||||||||||||||||||
(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.
2024 Form 10-Q | | 28 | ||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the company) as of June 30, 2024 and December 31, 2023 and the results of operations for the three and six months ended June 30, 2024 and 2023. 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.
On July 1, 2024, AbbVie announced Robert A. Michael, AbbVie's former president and chief operating officer, succeeded Richard A. Gonzalez as the company's chief executive officer (CEO). Mr. Gonzalez, who has served as CEO since the company's formation in 2013, retired from the role of CEO and became executive chairman of the board of directors, effective July 1, 2024. Additionally, the board has appointed Mr. Michael as a member of the board of directors effective July 1, 2024.
On February 12, 2024, AbbVie completed the acquisition of ImmunoGen, Inc. (ImmunoGen). The acquisition of ImmunoGen further builds on AbbVie's existing solid tumor pipeline of novel targeted therapies and next-generation immuno-oncology assets, which have the potential to create new treatment possibilities across multiple solid tumors and hematologic malignancies. AbbVie and ImmunoGen's combined capabilities represent an opportunity to deliver potentially transformative antibody-drug conjugate (ADC) therapies to patients. See Note 4 to the Condensed Consolidated Financial Statements for additional information on the acquisition. Subsequent to the acquisition date, AbbVie's consolidated financial statements include the assets, liabilities, operating results and cash flows of ImmunoGen.
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 wholesalers or through distributors, and depending on the market works through largely centralized national payers system to agree on reimbursement terms. Certain products are co-marketed or co-promoted with other companies. AbbVie operates as a single global business segment and has approximately 50,000 employees.
2024 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 execute its strategy and advance its mission in a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) 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) generating substantial operating cash flows to support investment in innovative research and development, and return cash to shareholders via a strong and growing dividend while also continuing to repay 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, 2024 included delivering worldwide net revenues of $26.8 billion, operating earnings of $6.8 billion, diluted earnings per share of $1.53 and cash flows from operations of $6.3 billion. Worldwide net revenues increased 3% on a reported basis and 4% on a constant currency basis.
Diluted earnings per share was $1.53 for the six months ended June 30, 2024 and included the following after-tax costs: (i) $3.3 billion related to the amortization of intangible assets; (ii) $2.1 billion for the change in fair value of contingent consideration
2024 Form 10-Q | | 29 | ||||
liabilities; and (iii) $611 million of acquisition and integration expenses. Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets and continued investment in AbbVie’s on-market brands.
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 90 compounds, devices or indications in development individually or under collaboration or license agreements and is focused on such important specialties as immunology, oncology, aesthetics, neuroscience and eye care. Of these programs, approximately 50 are in mid- and late-stage development.
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
Rinvoq
•In January 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Rinvoq in adults and adolescents with non-segmental vitiligo who are eligible for systemic therapy.
•In April 2024, AbbVie announced positive top-line results from its Phase 3 SELECT-GCA trial for Rinvoq in combination with a 26-week steroid taper regimen in patients with giant cell arteritis (GCA) achieved its primary endpoint.
•In April 2024, AbbVie announced positive top-line results from the head-to-head Phase 3b/4 Level-Up trial evaluating Rinvoq compared to dupilumab in adolescent and adult patients with moderate to severe atopic dermatitis. In the study, Rinvoq demonstrated superiority to dupilumab on the primary endpoint and all ranked secondary endpoints.
•In June 2024, AbbVie announced that the U.S. Food and Drug Administration (FDA) has approved Rinvoq for the treatment of pediatric patients two years of age and older with active polyarticular juvenile idiopathic arthritis (pJIA) as well as psoriatic arthritis (PsA), provided they have had an inadequate response or intolerance to one or more tumor necrosis factor (TNF) blockers.
•In July 2024, AbbVie announced that it has submitted applications for a new indication to the FDA and European Medicines Agency (EMA) for Rinvoq for the treatment of adult patients with GCA.
Skyrizi
•In June 2024, AbbVie announced that the FDA has approved Skyrizi for adults with moderately to severely active ulcerative colitis (UC).
•In July 2024, AbbVie announced that the European Commission has approved Skyrizi for the treatment of adult patients with moderately to severely active UC who have had an inadequate response to, lost response to, or were intolerant to conventional therapy or a biologic therapy.
Lutikizumab
•In January 2024, AbbVie announced Phase 2 results showing adults with moderate to severe hidradenitis suppurativa (HS) who had previously failed anti-TNF therapy who received lutikizumab achieved higher response rates than placebo in the primary endpoint of achieving HS Clinical Response at week 16.
•In July 2024, AbbVie initiated a Phase 3 clinical trial to evaluate lutikizumab in adult and adolescent patients with moderate to severe HS.
Oncology
Epkinly
•In March 2024, AbbVie initiated a Phase 3 clinical trial to evaluate Epkinly in combination with rituximab and lenalidomide in patients with previously untreated follicular lymphoma (FL).
2024 Form 10-Q | | 30 | ||||
•In June 2024, AbbVie announced that the FDA has approved Epkinly for the treatment of adults with relapsed or refractory (R/R) FL after two or more lines of prior therapy. This indication is approved under the FDA's Accelerated Approval program based on overall response rate (ORR) and durability of response. Continued approval for this indication may be contingent upon verification and description of clinical benefit in a confirmatory trial.
•In June 2024, AbbVie announced that the EMA Committee for Medicinal Products for Human Use has adopted a positive opinion recommending the conditional marketing authorization of Tepkinly as a monotherapy for the treatment of adult patients with R/R FL after two or more prior therapies.
Elahere
•In March 2024, AbbVie announced that the FDA granted full approval for Elahere for the treatment of folate receptor alpha (FRα)-positive, platinum-resistant epithelial ovarian, fallopian tube or primary peritoneal adult cancer patients treated with up to three prior therapies.
•In June 2024, AbbVie announced positive topline results from the Phase 2 PICCOLO trial evaluating Elahere monotherapy in heavily pre-treated patients with FRα positive, platinum-sensitive ovarian cancer. The study met its primary endpoint and no new safety concerns were identified.
Navitoclax
•In April 2024, AbbVie announced its decision to discontinue the Phase 3 TRANSFORM-2 study evaluating navitoclax, a BCL-XL/BCL-2 inhibitor, plus ruxolitinib in patients with R/R myelofibrosis following evaluation of the totality of data from the Phase 3 TRANSFORM-1 trial and feedback from regulators.
ABBV-383
•In June 2024, AbbVie initiated the CERVINO Phase 3 clinical trial to evaluate ABBV-383 monotherapy compared with standard available therapies in adult patients with R/R multiple myeloma who have received at least two lines of prior therapy.
Aesthetics
Juvederm Collection
•In March 2024, AbbVie announced the FDA approval of Juvederm Voluma XC for injection in the temple region to improve moderate to severe temple hollowing in adults over the age of 21.
Neuroscience
ABBV-951
•In January 2024, AbbVie announced the launch of Produodopa (ABBV-951) in the European Union for the treatment of advanced Parkinson's disease with severe motor fluctuations and hyperkinesia (excessive movement) or dyskinesia (involuntary movement), and when available combinations of Parkinson's medicinal products have not given satisfactory results.
•In June 2024, AbbVie announced it received a Complete Response Letter (CRL) from the FDA for the New Drug Application (NDA) for ABBV-951 for the treatment of motor fluctuations in adults with advanced Parkinson's disease. In its letter, the FDA cited observations that were identified during inspection of a third-party manufacturer listed in the NDA. The CRL did not identify any issues related to the safety, efficacy or labeling of ABBV-951, including the device, and does not request that AbbVie conduct additional efficacy or safety trials related to the drug or device-related testing.
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, 2023.
2024 Form 10-Q | | 31 | ||||
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) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
United States | $ | 11,106 | $ | 10,720 | 3.6 | % | 3.6 | % | $ | 20,147 | $ | 19,921 | 1.1 | % | 1.1 | % | ||||||||||||||||||||||||||||||||||
International | 3,356 | 3,145 | 6.8 | % | 12.7 | % | 6,625 | 6,169 | 7.4 | % | 12.1 | % | ||||||||||||||||||||||||||||||||||||||
Net revenues | $ | 14,462 | $ | 13,865 | 4.3 | % | 5.6 | % | $ | 26,772 | $ | 26,090 | 2.6 | % | 3.7 | % | ||||||||||||||||||||||||||||||||||
2024 Form 10-Q | | 32 | ||||
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) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Immunology | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Humira | United States | $ | 2,360 | $ | 3,452 | (31.6) | % | (31.6) | % | $ | 4,131 | $ | 6,400 | (35.5) | % | (35.5) | % | ||||||||||||||||||||||||||||||||||||
| International | 454 | 560 | (18.9) | % | (12.5) | % | 953 | 1,153 | (17.3) | % | (12.1) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 2,814 | $ | 4,012 | (29.8) | % | (28.9) | % | $ | 5,084 | $ | 7,553 | (32.7) | % | (31.9) | % | |||||||||||||||||||||||||||||||||||||
| Skyrizi | United States | $ | 2,340 | $ | 1,634 | 43.2 | % | 43.2 | % | $ | 3,996 | $ | 2,773 | 44.1 | % | 44.1 | % | ||||||||||||||||||||||||||||||||||||
| International | 387 | 249 | 55.5 | % | 61.8 | % | 739 | 470 | 57.3 | % | 61.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 2,727 | $ | 1,883 | 44.8 | % | 45.6 | % | $ | 4,735 | $ | 3,243 | 46.0 | % | 46.6 | % | |||||||||||||||||||||||||||||||||||||
| Rinvoq | United States | $ | 1,017 | $ | 645 | 57.9 | % | 57.9 | % | $ | 1,742 | $ | 1,094 | 59.3 | % | 59.3 | % | ||||||||||||||||||||||||||||||||||||
| International | 413 | 273 | 51.1 | % | 62.6 | % | 781 | 510 | 53.0 | % | 62.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,430 | $ | 918 | 55.8 | % | 59.2 | % | $ | 2,523 | $ | 1,604 | 57.3 | % | 60.4 | % | |||||||||||||||||||||||||||||||||||||
| Oncology | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Imbruvica | United States | $ | 595 | $ | 666 | (10.6) | % | (10.6) | % | $ | 1,205 | $ | 1,304 | (7.5) | % | (7.5) | % | ||||||||||||||||||||||||||||||||||||
| Collaboration revenues | 238 | 241 | (1.4) | % | (1.4) | % | 466 | 481 | (3.2) | % | (3.2) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 833 | $ | 907 | (8.2) | % | (8.2) | % | $ | 1,671 | $ | 1,785 | (6.4) | % | (6.4) | % | |||||||||||||||||||||||||||||||||||||
| Venclexta | United States | $ | 300 | $ | 265 | 12.8 | % | 12.8 | % | $ | 581 | $ | 530 | 9.5 | % | 9.5 | % | ||||||||||||||||||||||||||||||||||||
| International | 337 | 306 | 10.4 | % | 18.4 | % | 670 | 579 | 15.8 | % | 22.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 637 | $ | 571 | 11.5 | % | 15.8 | % | $ | 1,251 | $ | 1,109 | 12.8 | % | 16.0 | % | |||||||||||||||||||||||||||||||||||||
Elahere(a) | United States | $ | 128 | $ | — | n/m | n/m | $ | 192 | $ | — | n/m | n/m | ||||||||||||||||||||||||||||||||||||||||
| Epkinly | Collaboration revenues | $ | 29 | $ | — | >100.0 % | >100.0 % | $ | 51 | $ | — | >100.0 % | >100.0 % | ||||||||||||||||||||||||||||||||||||||||
| International | 7 | — | n/m | n/m | 12 | — | n/m | n/m | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 36 | $ | — | >100.0 % | >100.0 % | $ | 63 | $ | — | >100.0 % | >100.0 % | |||||||||||||||||||||||||||||||||||||||||
| Aesthetics | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Botox Cosmetic | United States | $ | 450 | $ | 420 | 7.1 | % | 7.1 | % | $ | 839 | $ | 829 | 1.2 | % | 1.2 | % | ||||||||||||||||||||||||||||||||||||
| International | 279 | 265 | 5.2 | % | 10.9 | % | 523 | 515 | 1.6 | % | 6.2 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 729 | $ | 685 | 6.4 | % | 8.6 | % | $ | 1,362 | $ | 1,344 | 1.3 | % | 3.1 | % | |||||||||||||||||||||||||||||||||||||
| Juvederm Collection | United States | $ | 138 | $ | 125 | 10.4 | % | 10.4 | % | $ | 244 | $ | 247 | (1.2) | % | (1.2) | % | ||||||||||||||||||||||||||||||||||||
| International | 205 | 243 | (15.6) | % | (10.0) | % | 396 | 476 | (16.8) | % | (11.9) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 343 | $ | 368 | (6.8) | % | (3.1) | % | $ | 640 | $ | 723 | (11.5) | % | (8.3) | % | |||||||||||||||||||||||||||||||||||||
| Other Aesthetics | United States | $ | 275 | $ | 284 | (2.3) | % | (2.3) | % | $ | 556 | $ | 530 | 5.2 | % | 5.2 | % | ||||||||||||||||||||||||||||||||||||
| International | 43 | 47 | (11.7) | % | (4.1) | % | 81 | 87 | (8.1) | % | (1.8) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 318 | $ | 331 | (3.6) | % | (2.5) | % | $ | 637 | $ | 617 | 3.3 | % | 4.2 | % | |||||||||||||||||||||||||||||||||||||
| Neuroscience | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Botox Therapeutic | United States | $ | 669 | $ | 614 | 8.9 | % | 8.9 | % | $ | 1,280 | $ | 1,201 | 6.6 | % | 6.6 | % | ||||||||||||||||||||||||||||||||||||
| International | 145 | 134 | 7.9 | % | 13.0 | % | 282 | 266 | 5.9 | % | 9.7 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 814 | $ | 748 | 8.7 | % | 9.6 | % | $ | 1,562 | $ | 1,467 | 6.5 | % | 7.2 | % | |||||||||||||||||||||||||||||||||||||
| Vraylar | United States | $ | 773 | $ | 657 | 17.5 | % | 17.5 | % | $ | 1,465 | $ | 1,217 | 20.3 | % | 20.3 | % | ||||||||||||||||||||||||||||||||||||
| International | 1 | 1 | 68.8 | % | 69.2 | % | 3 | 2 | 96.7 | % | 96.3 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 774 | $ | 658 | 17.6 | % | 17.6 | % | $ | 1,468 | $ | 1,219 | 20.4 | % | 20.4 | % | |||||||||||||||||||||||||||||||||||||
| Duodopa | United States | $ | 23 | $ | 24 | (2.6) | % | (2.6) | % | $ | 48 | $ | 49 | (2.6) | % | (2.6) | % | ||||||||||||||||||||||||||||||||||||
| International | 90 | 93 | (3.2) | % | (1.7) | % | 180 | 186 | (3.0) | % | (2.8) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 113 | $ | 117 | (3.1) | % | (1.9) | % | $ | 228 | $ | 235 | (2.9) | % | (2.7) | % | |||||||||||||||||||||||||||||||||||||
| Ubrelvy | United States | $ | 227 | $ | 194 | 16.6 | % | 16.6 | % | $ | 424 | $ | 344 | 23.1 | % | 23.1 | % | ||||||||||||||||||||||||||||||||||||
| International | 4 | 2 | 81.6 | % | 82.3 | % | 10 | 4 | >100.0 % | >100.0 % | |||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 231 | $ | 196 | 17.5 | % | 17.5 | % | $ | 434 | $ | 348 | 24.6 | % | 24.6 | % | |||||||||||||||||||||||||||||||||||||
| Qulipta | United States | $ | 146 | $ | 95 | 52.8 | % | 52.8 | % | $ | 274 | $ | 161 | 69.8 | % | 69.8 | % | ||||||||||||||||||||||||||||||||||||
| International | 4 | 1 | >100.0 % | >100.0 % | 7 | 1 | >100.0 % | >100.0 % | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 150 | $ | 96 | 56.3 | % | 56.3 | % | $ | 281 | $ | 162 | 73.2 | % | 73.2 | % | |||||||||||||||||||||||||||||||||||||
2024 Form 10-Q | | 33 | ||||
| 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) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other Neuroscience | United States | $ | 57 | $ | 65 | (10.1) | % | (10.1) | % | $ | 118 | $ | 140 | (14.6) | % | (14.6) | % | ||||||||||||||||||||||||||||||||||||
| International | 23 | 5 | >100.0 % | >100.0 % | 36 | 9 | >100.0 % | >100.0 % | |||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | 80 | $ | 70 | 16.6 | % | 17.5 | % | $ | 154 | $ | 149 | 4.1 | % | 4.7 | % | |||||||||||||||||||||||||||||||||||||
| Eye Care | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ozurdex | United States | $ | 35 | $ | 34 | 4.2 | % | 4.2 | % | $ | 69 | $ | 73 | (5.4) | % | (5.4) | % | ||||||||||||||||||||||||||||||||||||
| International | 89 | 85 | 4.6 | % | 9.5 | % | 186 | 161 | 15.6 | % | 18.8 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 124 | $ | 119 | 4.5 | % | 8.0 | % | $ | 255 | $ | 234 | 9.0 | % | 11.2 | % | |||||||||||||||||||||||||||||||||||||
| Lumigan/Ganfort | United States | $ | 42 | $ | 51 | (15.8) | % | (15.8) | % | $ | 71 | $ | 114 | (37.4) | % | (37.4) | % | ||||||||||||||||||||||||||||||||||||
| International | 61 | 68 | (11.2) | % | (8.1) | % | 123 | 135 | (9.4) | % | (7.3) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 103 | $ | 119 | (13.2) | % | (11.4) | % | $ | 194 | $ | 249 | (22.2) | % | (21.0) | % | |||||||||||||||||||||||||||||||||||||
| Alphagan/Combigan | United States | $ | 13 | $ | 32 | (59.5) | % | (59.5) | % | $ | 28 | $ | 60 | (53.4) | % | (53.4) | % | ||||||||||||||||||||||||||||||||||||
| International | 36 | 33 | 9.1 | % | 20.5 | % | 80 | 76 | 5.0 | % | 12.8 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 49 | $ | 65 | (23.7) | % | (17.8) | % | $ | 108 | $ | 136 | (20.6) | % | (16.2) | % | |||||||||||||||||||||||||||||||||||||
| Restasis | United States | $ | 18 | $ | 82 | (77.3) | % | (77.3) | % | $ | 62 | $ | 161 | (61.0) | % | (61.0) | % | ||||||||||||||||||||||||||||||||||||
| International | 14 | 17 | (18.9) | % | (14.5) | % | 27 | 30 | (11.4) | % | (6.5) | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 32 | $ | 99 | (67.0) | % | (66.2) | % | $ | 89 | $ | 191 | (53.1) | % | (52.3) | % | |||||||||||||||||||||||||||||||||||||
| Other Eye Care | United States | $ | 131 | $ | 110 | 18.9 | % | 18.9 | % | $ | 236 | $ | 220 | 7.1 | % | 7.1 | % | ||||||||||||||||||||||||||||||||||||
| International | 94 | 105 | (10.1) | % | (6.1) | % | 189 | 195 | (2.7) | % | 1.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 225 | $ | 215 | 4.8 | % | 6.7 | % | $ | 425 | $ | 415 | 2.5 | % | 4.2 | % | |||||||||||||||||||||||||||||||||||||
| Other Key Products | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mavyret | United States | $ | 167 | $ | 193 | (13.2) | % | (13.2) | % | $ | 311 | $ | 364 | (14.4) | % | (14.4) | % | ||||||||||||||||||||||||||||||||||||
| International | 202 | 194 | 3.8 | % | 8.8 | % | 407 | 387 | 5.0 | % | 8.9 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 369 | $ | 387 | (4.7) | % | (2.2) | % | $ | 718 | $ | 751 | (4.4) | % | (2.4) | % | |||||||||||||||||||||||||||||||||||||
| Creon | United States | $ | 372 | $ | 282 | 32.1 | % | 32.1 | % | $ | 657 | $ | 587 | 12.0 | % | 12.0 | % | ||||||||||||||||||||||||||||||||||||
| Linzess/Constella | United States | $ | 211 | $ | 269 | (21.7) | % | (21.7) | % | $ | 468 | $ | 520 | (10.0) | % | (10.0) | % | ||||||||||||||||||||||||||||||||||||
| International | 10 | 9 | 9.1 | % | 9.2 | % | 19 | 17 | 9.1 | % | 8.0 | % | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | 221 | $ | 278 | (20.7) | % | (20.7) | % | $ | 487 | $ | 537 | (9.4) | % | (9.4) | % | |||||||||||||||||||||||||||||||||||||
| All other | $ | 810 | $ | 741 | 8.7 | % | 10.5 | % | $ | 1,554 | $ | 1,432 | 8.4 | % | 10.2 | % | |||||||||||||||||||||||||||||||||||||
| Total net revenues | $ | 14,462 | $ | 13,865 | 4.3 | % | 5.6 | % | $ | 26,772 | $ | 26,090 | 2.6 | % | 3.7 | % | |||||||||||||||||||||||||||||||||||||
n/m – Not meaningful
(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.
The following discussion and analysis of AbbVie’s net revenues by product is presented on a constant currency basis.
Global Humira sales decreased 29% for the three months and 32% for the six months ended June 30, 2024. In the United States, Humira sales decreased by 32% for the three months and 36% for the six months ended June 30, 2024 primarily driven by direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, Humira revenues decreased 13% for the three months and 12% for the six months ended June 30, 2024 primarily driven by the continued impact of direct biosimilar competition. AbbVie continues to pursue strategies to maintain broad formulary access of Humira and manage the impact of biosimilar erosion.
Net revenues for Skyrizi increased 46% for the three months and 47% for the six months ended June 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.
Net revenues for Rinvoq increased 59% for the three months and 60% for the six months ended June 30, 2024 primarily driven by continued strong market share uptake as well as market growth across all indications.
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 8% for the three months and 6% for the six months ended June 30, 2024 primarily driven by decreased demand and lower market share in the United States.
Net revenues for Venclexta increased 16% for the three and six months ended June 30, 2024 primarily driven by continued market share uptake and market growth across all indications.
2024 Form 10-Q | | 34 | ||||
Net revenues for Elahere were $128 million for the three months and $192 million for the six months ended June 30, 2024 for the period subsequent to the completion of the ImmunoGen acquisition.
Net revenues for Botox Cosmetic increased 9% for the three months and 3% for the six months ended June 30, 2024 primarily driven by favorable pricing and increased consumer demand. Net revenues for the six months ended June 30, 2024 were also partially offset by the unfavorable impact of customer inventory destocking in the United States.
Net revenues for Juvederm Collection decreased 3% for the three months and 8% for the six months ended June 30, 2024. In the United States, Juvederm Collection net revenues increased 10% for the three months primarily driven by market share uptake and decreased 1% for the six months ended June 30, 2024 primarily driven by the unfavorable impact of customer inventory destocking partially offset by market share uptake. Internationally, Juvederm net revenues decreased 10% for the three months and 12% for the six months ended June 30, 2024 primarily driven by decreased consumer demand across international markets.
Net revenues for Botox Therapeutic increased 10% for the three months and 7% for the six months ended June 30, 2024 primarily driven by continued market share uptake as well as market growth.
Net revenues for Vraylar increased 18% for the three months and 20% for the six months ended June 30, 2024 primarily driven by continued market share uptake as well as market growth.
Net revenues for Ubrelvy increased 18% for the three months and 25% for the six months ended June 30, 2024 primarily driven by continued market share uptake as well as market growth.
Net revenues for Qulipta increased 56% for the three months and 73% for the six months ended June 30, 2024 primarily driven by continued strong market share uptake as well as market growth.
Gross Margin
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||||
| Gross margin | $ | 10,260 | $ | 9,625 | 7 | % | $ | 18,476 | $ | 17,864 | 3 | % | ||||||||||||||||||||||||||
| as a % of net revenues | 71 | % | 69 | % | 69 | % | 68 | % | ||||||||||||||||||||||||||||||
Gross margin as a percentage of net revenues increased for the three and six months ended June 30, 2024 compared to the prior year. Gross margin percentage for the three and six months ended June 30, 2024 was favorably impacted by lower amortization of intangibles.
Selling, General and Administrative
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 3,377 | $ | 3,268 | 3 | % | $ | 6,692 | $ | 6,307 | 6 | % | ||||||||||||||||||||||||||
| as a % of net revenues | 23 | % | 24 | % | 25 | % | 24 | % | ||||||||||||||||||||||||||||||
Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased for the three months and increased for the six months ended June 30, 2024 compared to the prior year. SG&A expense percentage for the three months ended June 30, 2024 was favorably impacted by leverage from revenue growth. SG&A expense percentage for the six months ended June 30, 2024 was unfavorably impacted by acquisition and integration costs incurred in connection with the ImmunoGen acquisition including cash-settled, post-closing expense for ImmunoGen employee incentive awards. See Note 4 to the condensed consolidated financial statements for additional information.
2024 Form 10-Q | | 35 | ||||
Research and Development
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | % change | 2024 | 2023 | % change | ||||||||||||||||||||||||||||||||
| Research and development | $ | 1,948 | $ | 1,733 | 12 | % | $ | 3,887 | $ | 4,025 | (3) | % | ||||||||||||||||||||||||||
| as a % of net revenues | 13 | % | 12 | % | 15 | % | 15 | % | ||||||||||||||||||||||||||||||
Research and development (R&D) expenses as a percentage of net revenues increased for the three months and were flat for the six months ended June 30, 2024 compared to the prior year. R&D expense percentage for the three months ended June 30, 2024 was unfavorably impacted by increased funding to support all stages of the company’s pipeline assets. R&D expense percentage for the six months ended June 30, 2024 was favorably impacted by an intangible asset impairment charge of $630 million incurred during the six months ended June 30, 2023 offset by increased funding to support all stages of the company’s pipeline assets as well as acquisition and integration costs incurred in connection with the ImmunoGen acquisition including cash-settled, post-closing expense for ImmunoGen employee incentive awards. See Note 4 to the condensed consolidated financial statements for additional information.
Acquired IPR&D and Milestones
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (dollars in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Upfront charges | $ | 927 | $ | 220 | $ | 1,006 | $ | 352 | ||||||||||||||||||
| Development milestones | 10 | 60 | 95 | 78 | ||||||||||||||||||||||
| Acquired IPR&D and milestones | $ | 937 | $ | 280 | $ | 1,101 | $ | 430 | ||||||||||||||||||
Acquired IPR&D and milestones expense for the three and six months ended June 30, 2024 included a charge related to the upfront payment of $250 million to acquire Celsius Therapeutics. See Note 4 to the condensed consolidated financial statements for additional information.
Other Non-Operating Expenses (Income)
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||
| (in millions) | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||
| Interest expense | $ | 726 | $ | 552 | $ | 1,386 | $ | 1,105 | ||||||||||||||||||
| Interest income | (220) | (98) | (427) | (197) | ||||||||||||||||||||||
| Interest expense, net | $ | 506 | $ | 454 | $ | 959 | $ | 908 | ||||||||||||||||||
| Net foreign exchange loss | $ | 1 | $ | 37 | $ | 5 | $ | 72 | ||||||||||||||||||
| Other expense, net | 1,345 | 1,412 | 1,931 | 3,216 | ||||||||||||||||||||||
Interest expense increased for the three and six months ended June 30, 2024 compared to the prior year primarily due to the incremental interest associated with financing the ImmunoGen and Cerevel Therapeutics acquisitions. See Note 8 to the condensed consolidated financial statements for additional information related to debt issued to finance the ImmunoGen and Cerevel Therapeutics acquisitions.
Interest income increased for the three and six months ended June 30, 2024 compared to the prior year primarily due to a higher average cash and cash equivalents balance and the impact of higher interest rates.
Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $1.5 billion for the three months and $2.1 billion for the six months ended June 30, 2024 and $1.6 billion for the three months and $3.4 billion for the six months ended June 30, 2023. 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, 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time, partially offset by higher discount rates. For the three and six months ended June 30, 2023 the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time. The change in fair value for the three months ended June 30, 2023 is also partially offset by higher discount rates.
2024 Form 10-Q | | 36 | ||||
Income Tax Expense
The effective tax rate was 36% for the three months and 30% for the six months ended June 30, 2024 compared to 22% for the three months and 26% for the six months ended June 30, 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 increase in the effective tax rate for the three months ended June 30, 2024 over the prior year was primarily due to business development activities. The increase in the effective tax rate for the six months ended June 30, 2024 over the prior year was primarily due to business development activities in the current period, offset by decreased changes in fair value of contingent consideration and impairment of certain intangible assets in the prior period.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
| Six months ended June 30, | |||||||||||
| (in millions) | 2024 | 2023 | |||||||||
| Cash flows provided by (used in): | |||||||||||
| Operating activities | $ | 6,311 | $ | 10,512 | |||||||
| Investing activities | (10,690) | (840) | |||||||||
| Financing activities | 4,722 | (10,112) | |||||||||
Operating cash flows for the six months ended June 30, 2024 decreased compared to the prior year primarily due to the timing of working capital, higher contingent consideration payments classified as operating cash flows and decreased results from operations driven by ImmunoGen acquisition-related cash expenses.
Investing cash flows for the six months ended June 30, 2024 included $9.8 billion cash consideration paid to acquire ImmunoGen offset by cash acquired of $591 million, payments made for other acquisitions and investments of $1.0 billion and capital expenditures of $434 million. Investing cash flows for the six months ended June 30, 2023 included payments made for other acquisitions and investments of $513 million and capital expenditures of $353 million.
Financing cash flows for the six months ended June 30, 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisitions of ImmunoGen and Cerevel Therapeutics. Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and repayments of €1.5 billion aggregate principal amount of 1.38% senior euro notes, €700 million aggregate principal amount of 1.25% senior euro notes, $1.0 billion aggregate principal amount of 3.85% senior notes and $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition. Financing cash flows for the six months ended June 30, 2023 included repayments of $1.0 billion floating rate term loan, $1.0 billion aggregate principal amount of 2.85% senior notes and $350 million aggregate principal amount of the company’s 2.80% senior notes.
Financing cash flows also included cash dividend payments of $5.5 billion for the six months ended June 30, 2024 and $5.3 billion for the six months ended June 30, 2023. The increase in cash dividend payments was primarily driven by the increase in the quarterly dividend rate.
On June 21, 2024, the company announced that its board of directors declared a quarterly cash dividend of $1.55 per share for stockholders of record at the close of business on July 15, 2024, payable on August 15, 2024. 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. 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 six months ended June 30, 2024 and 10 million shares for $1.6 billion during the six months ended June 30, 2023.
Financing cash flows also included contingent consideration payments of $641 million for the six months ended June 30, 2023. There were no contingent consideration payments classified as financing cash flows for the six months ended June 30, 2024.
2024 Form 10-Q | | 37 | ||||
During the six months ended June 30, 2024, the company issued and redeemed $1.7 billion of commercial paper. There were no commercial paper borrowings outstanding as of June 30, 2024 and December 31, 2023. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.
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
In December 2023, in connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, 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. 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 March 2023, AbbVie entered into an amended and restated five-year revolving credit facility. The amendment increased the unsecured revolving credit facility commitments from $4.0 billion to $5.0 billion and extended the maturity date of the facility from August 2023 to March 2028. This credit facility enables the company to borrow funds on an unsecured basis at variable interest rates and contains various covenants. At June 30, 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 facility as of June 30, 2024 and December 31, 2023.
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
There were no changes in the company’s credit ratings during the six months ended June 30, 2024. 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, 2023. There have been no significant changes in the company’s application of its critical accounting policies during the six months ended June 30, 2024.
2024 Form 10-Q | | 38 | ||||
FORWARD-LOOKING STATEMENTS
Some statements in this quarterly report on Form 10-Q are, or may be considered, forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate,” “project,” and similar expressions and use of future or conditional verbs, 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 expressed or implied in the forward-looking statements. Such risks and uncertainties include, but are not limited to challenges to intellectual property, competition from other products, difficulties inherent in the research and development process, adverse litigation or government action and changes to laws and regulations applicable to our industry. 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, 2023, 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, and specifically declines, to release publicly any revisions to forward-looking statements as a result of subsequent events or developments, except as required by law.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
For a discussion of the company's market risk, see Item 7A, "Quantitative and Qualitative Disclosures About Market Risk" in AbbVie's Annual Report on Form 10-K for the year ended December 31, 2023.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Evaluation of disclosure controls and procedures. The Chief Executive Officer, Robert A. Michael, and the Chief Financial Officer, Scott T. Reents, evaluated the effectiveness of AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie's disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Changes in internal control over financial reporting. There were no changes in AbbVie's internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, AbbVie's internal control over financial reporting during the quarter ended June 30, 2024.
Inherent Limitations on Effectiveness of Controls. AbbVie’s management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that AbbVie’s disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
2024 Form 10-Q | | 39 | ||||
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Information pertaining to legal proceedings is provided in Note 12 to the Condensed Consolidated Financial Statements and is incorporated by reference herein.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c) Issuer Purchases of Equity Securities
| Period | (a) Total Number of Shares (or Units) Purchased | (b) Average Price Paid per Share (or Unit) | (c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | (d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||||||||
| April 1, 2024 - April 30, 2024 | 986 | (1) | $170.95 | (1) | — | $3,849,610,303 | ||||||||||||||||||||
| May 1, 2024 - May 31, 2024 | 1,058 | (1) | $162.91 | (1) | — | $3,849,610,303 | ||||||||||||||||||||
| June 1, 2024 - June 30, 2024 | 1,081 | (1) | $167.51 | (1) | — | $3,849,610,303 | ||||||||||||||||||||
| Total | 3,125 | (1) | $167.04 | (1) | — | $3,849,610,303 | ||||||||||||||||||||
1.In addition to AbbVie shares repurchased on the open market under a publicly announced program, if any, these shares also included the shares purchased on the open market for the benefit of participants in the AbbVie Employee Stock Purchase Plan – 986 in April; 1,058 in May; and 1,081 in June.
These shares do not include the shares surrendered to AbbVie to satisfy minimum tax withholding obligations in connection with the vesting or exercise of stock-based awards.
ITEM 5. OTHER ITEMS
(c) Director and Officer Trading Arrangements
During the three months ended June 30, 2024, no director or officer of the company adopted, modified or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
2024 Form 10-Q | | 40 | ||||
ITEM 6. EXHIBITS
Exhibits 32.1 and 32.2 are furnished herewith and should not be deemed to be “filed” under the Securities Exchange Act of 1934.
| Exhibit No. | Exhibit Description | ||||||||||
| 101 | The following financial statements and notes from the AbbVie Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2024, filed on August 7, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Earnings; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements. | ||||||||||
| 104 | Cover Page Interactive Data File (the cover page from the AbbVie Inc. Quarterly Report on Form 10-Q formatted as Inline XBRL and contained in Exhibit 101). | ||||||||||
_______________________________________________________________________________
2024 Form 10-Q | | 41 | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ABBVIE INC. | ||||||||
By: | /s/ Scott T. Reents | |||||||
| Scott T. Reents | ||||||||
| Executive Vice President, | ||||||||
| Chief Financial Officer (Principal Financial Officer) | ||||||||
Date: August 7, 2024
2024 Form 10-Q | | 42 | ||||
Exhibit 31.1
Certification of Chief Executive Officer
Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))
I, Robert A. Michael, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AbbVie Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of AbbVie as of, and for, the periods presented in this report;
4. AbbVie’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for AbbVie and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to AbbVie, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of AbbVie’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
5. AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’s board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect AbbVie’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
| Date: | August 7, 2024 | /s/ Robert A. Michael | ||||||
| Robert A. Michael, Chief Executive Officer | ||||||||
Exhibit 31.2
Certification of Chief Financial Officer
Required by Rule 13a-14(a) (17 CFR 240.13a-14(a))
I, Scott T. Reents, certify that:
1. I have reviewed this quarterly report on Form 10-Q of AbbVie Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of AbbVie as of, and for, the periods presented in this report;
4. AbbVie’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for AbbVie and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to AbbVie, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of AbbVie’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in AbbVie’s internal control over financial reporting that occurred during AbbVie’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, AbbVie’s internal control over financial reporting; and
5. AbbVie’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to AbbVie’s auditors and the audit committee of AbbVie’s board of directors:
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect AbbVie’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in AbbVie’s internal control over financial reporting.
| Date: | August 7, 2024 | /s/ Scott T. Reents | ||||||
| Scott T. Reents, Executive Vice President, | ||||||||
| Chief Financial Officer | ||||||||
Exhibit 32.1
Certification Pursuant To
18 U.S.C. Section 1350
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of AbbVie Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission (the “Report”), I, Robert A. Michael, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Robert A. Michael | ||
| Robert A. Michael | ||
| Chief Executive Officer | ||
| August 7, 2024 | ||
A signed original of this written statement required by Section 906 has been provided to AbbVie Inc. and will be retained by AbbVie Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
Certification Pursuant To
18 U.S.C. Section 1350
As Adopted Pursuant To
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Quarterly Report of AbbVie Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2024 as filed with the Securities and Exchange Commission (the “Report”), I, Scott T. Reents, Executive Vice President, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Scott T. Reents | ||
| Scott T. Reents | ||
| Executive Vice President, Chief Financial Officer | ||
| August 7, 2024 | ||
A signed original of this written statement required by Section 906 has been provided to AbbVie Inc. and will be retained by AbbVie Inc. and furnished to the Securities and Exchange Commission or its staff upon request.