Celebrating
Our Employees
2021
Annual Report
on Form 10-K
2022
Notice of Annual
Meeting & Proxy
Statement
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Frank Zhou is passionate
Support from community and corporate partners was
about investing in talent. He has
essential to the COVID-19 vaccine rollout plan. In total, about
550 AbbVie volunteers contributed to 12,000 vaccinations
near AbbVie’s headquarters in Lake County, Illinois. Read
more on the inside back cover.
seen firsthand how AbbVie’s
Talent Philosophy results in
high-performing teams and an
environment where employees
can grow their career – including
his own journey which has taken
him to the U.S., Europe and now VP
for JAPAC in Singapore.
AbbVie is leading one of the
largest genomics research efforts
in the field with over $100 million
invested in its Genomics Research
Center since 2016. Liz Asque is
part of a highly skilled team of sci-
entists from the center working to
deliver the right medicines to
patients faster.
Scientific innovation has greatly changed
the treatment landscape for blood cancer.
Our oncology team, including employees
Our eye care treatments have helped manage
and preserve the vision of millions of people
worldwide. This is made possible because of
photographed in France during Blood Cancer
teams, like this one in Brazil, who work tirelessly
Awareness Month, continue to advance science
to find new ways to meet patients’ needs.
further and address barriers to treatment for
patients globally.
AbbVie’s seven employee resource groups
Sherri Carter has made it her mission to help
helped colleagues stay connected throughout
women and underrepresented talent grow
2021. Like our other ERG leaders, Lis Rankovic,
careers in STEM. As an associate director in our
co-chair of our Asian Leadership Network,
works to build community on a global scale
with a focus on networking, professional
development and talent attraction.
operations group, she oversees a building and
team that manufactures critical medicine, while
doing her part to foster greater diversity and
inclusion by mentoring and nurturing talent.
AbbVie
1 North Waukegan Road,
North Chicago, IL 60064 U.S.A.
Copyright ©2022 AbbVie.
All rights reserved.
abbvie.com
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Stockholder Information
AbbVie Inc. Corporate Headquarters
1 North Waukegan Road
North Chicago, IL 60064
847.932.7900
abbvie.com
Investor Relations
Dept. ZZ05, AP34
Corporate Secretary
Dept. V364, AP34
Stock Listing
The ticker for AbbVie’s common stock is ABBV.
The principal market for the AbbVie common stock
is the NYSE. AbbVie common stock is also listed on
the Chicago Stock Exchange.
Annual Meeting
The Annual Meeting will be held on Friday, May 6,
2022, at 9 a.m. CT. Please see the proxy statement for
information about how to attend the virtual Annual
Meeting
Dividend Reinvestment Plan
The AbbVie Dividend Reinvestment Plan offers
registered stockholders an opportunity to purchase
additional shares, commission-free, through
automatic dividend reinvestment and/or optional
cash investments. Interested persons may contact
the transfer agent.
Transfer Agent
EQ Shareholder Services
P.O. Box 64874
St. Paul, MN 55164-0874
www.shareowneronline.com
877.881.5970
651.450.4064
About AbbVie
AbbVie’s mission is to discover and deliver
innovative medicines that solve serious health
issues today and address the medical challenges of
tomorrow. We strive to have a remarkable impact on
people’s lives across several key therapeutic areas:
immunology, oncology, neuroscience, eye care,
virology, women’s health and gastroenterology, in
addition to products and services across its Allergan
Aesthetics portfolio. For more information about
AbbVie, please visit us at www.abbvie.com.
Science for the health of society in 2021
Our commitment to health doesn’t stop with our medicines.
We’re committed to giving back to our communities and our wide range capabilities have
been valuable in the fight against the COVID-19 pandemic.
We launched a vaccine clinic with
Encouraged employees to
the Lake County Health Department,
volunteer at vaccine clinics in
Many AbbVie employees have
specialized skills needed to
our major U.S. locations in Illinois,
volunteer in a pandemic, so AbbVie
the Cities of North Chicago and
Waukegan, and North Chicago
Community Partners.
• Improved vaccine access for
marginalized communities by
addressing transportation and
technology barriers.
California, and Massachusetts.
• 500+ AbbVie volunteers staffed
11 clinic days at the Lake County
Fairgrounds mass vaccination
site in Illinois, contributing to over
12,000 vaccinations.
• Almost 6,000 seniors were
• Employees partnered with
vaccinated, many were low-income
Direct Relief and VOCES Puerto
people and from a high-risk
population.
established policies empowering
employees to join the fight against
COVID-19. These policies enabled
employees with relevant medical,
pharmaceutical, R&D, public health
skills and training to volunteer with
government and community efforts
and allowed volunteers to receive
full pay, benefits, and to return to
their position after their service.
Rico Immunization and Health
Promotion Coalition to process
4,000 vaccination records to help
the local government process
vaccination information.
• 18 employees volunteered at
Chicago’s United Center Mass
Vaccination site, contributing to
over 7,000 vaccinations.
Year one of our $55 million, five-year commitment to advance health and education equity
in Black and historically marginalized communities across the United States set a strong
foundation for change.
Direct Relief launched
Equal Justice Initiative
NAACP Legal Defences
National Urban League
the Fund for Health
Equity, seeded by the
reached millions with
and Educational Fund,
expanded opportunities
groundbreaking reports,
Inc. continued to battle for
for marginalized youth,
AbbVie Foundation, and
films and resources
awarded its first 10 grants
to community health
highlighting the history
of racial injustice in the
civil rights, racial justice
and an inclusive society
while advocating for the
building capacity at 17 U.S.
sites and implementing a
mentorship model enabling
centers addressing health
U.S. while winning legal
rights of Black Americans
300 mentors to support
disparities.
victories challenging
to ensure equal access to
over 1,500 young people.
wrongful convictions and
resources and relief.
excessive punishment.
Providence St. Mel,
awarded 17 scholarships
and expanded programs
United Negro College
Urban Health Initiative
Year Up empowered over
Fund built the Healthcare
launched Liaisons in Care
3,000 young adults to
Workforce Diversity
(LinC) to promote health
achieve economic mobility
to help close achievement
Program and awarded 200
equity in Chicago’s South
and justice by providing
gaps for Black students
struggling academically.
scholarships to prepare
Black professionals to
Side community, engaging
access to technical,
in over 775 patients visits,
professional, and real-
pursue healthcare careers
providing education on
world work experience
and drive greater equity in
disease management and
and by piloting new, virtual
health and education.
food, transportation and
opportunities for increased
housing resources.
participation.
Printed on recycled paper
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Dear AbbVie Shareholder,
Our company delivered another outstanding year of performance in 2021 and
demonstrated our continuing commitment to our many stakeholders, including the
patients that we serve, the communities that we impact and our shareholders. The
resiliency and dedication of our 50,000 employees throughout the world allowed us to
achieve AbbVie’s record revenue and earnings per share (EPS) as well as a total
shareholder return of more than 30 percent. We further invested in science to support our
pipeline of promising new therapies, and we gave back to our communities through both
our philanthropic efforts and through our patient assistance programs, in which we provided
free medicines to over 170,000 patients who were experiencing financial need. I am
tremendously proud of the results we achieved, and I want to thank all of the AbbVie
employees who made these results possible.
Our financial performance was strong. We delivered full year adjusted EPS of $12.70,
which represents growth of approximately 20 percent over the prior year, and net revenues
of more than $56 billion, an increase of nearly 23 percent over the prior year. Our
adjusted investment in research and development was more than $6.5 billion, which
represents a nearly 12 percent increase over 2020. We have a proven track record of
developing new medicines, with 21 major product or indication approvals since the inception
of our company. We anticipate the approval of over a dozen new products or indications
in our key therapeutic franchises over the next couple years. Our continuous investment in
leading-edge science will fuel our growth in the next decade and will benefit patients with
new therapies to treat difficult disease conditions.
Additionally, we delivered on our promise to serve the communities where we live and
work. In 2021, we supported COVID-19 vaccine clinics in underserved areas to help
vaccinate more than 18,000 of the most vulnerable patient populations and donated
hundreds of hours of employee time volunteering to support local mass vaccination sites.
That is just one example of the dedication and commitment of our AbbVie employees.
We also continued to deliver on our pledge to advance health and educational opportunities
for underserved communities through the implementation of our $50 million commitment
to racial equity.
I am proud of the company that we have built and the results that we have delivered
in 2021. We are well positioned to continue with our mission to advance science and make
a remarkable impact on people’s lives. Thank you for your support in 2021 and I look
forward to our achievements in 2022.
Sincerely,
Richard A. Gonzalez
Chairman and Chief Executive Officer
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K
(MARK ONE)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
OR
EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 001-35565
Delaware
(State or other jurisdiction of
incorporation or organization)
32-0375147
(I.R.S. employer
identification number)
(Exact name of registrant as specified in its charter)
1 North Waukegan Road
North Chicago, Illinois 60064-6400
(847) 932-7900
(Address, including zip code, and telephone number of principal executive offices)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
1.500% Senior Notes due 2023
1.375% Senior Notes due 2024
1.250% Senior Notes due 2024
0.750% Senior Notes due 2027
2.125% Senior Notes due 2028
2.625% Senior Notes due 2028
2.125% Senior Notes due 2029
1.250% Senior Notes due 2031
ABBV
ABBV23B
ABBV24
ABBV24B
ABBV27
ABBV28
ABBV28B
ABBV29
ABBV31
New York Stock Exchange
Chicago Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☒
No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.
Yes ☐
No ☒
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 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, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ☒
Non-Accelerated Filer ☐
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐
No ☒
The aggregate market value of the 1,751,117,802 shares of voting stock held by non-affiliates of the registrant, computed by reference to the closing price as
reported on the New York Stock Exchange, as of the last business day of AbbVie Inc.’s most recently completed second fiscal quarter (June 30, 2021), was
$197,245,909,217. AbbVie has no non-voting common equity.
Number of common shares outstanding as of January 31, 2022: 1,768,753,829
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the 2022 AbbVie Inc. Proxy Statement are incorporated by reference into Part III. The Definitive Proxy Statement will be filed on or about March 21,
2022.
ABBVIE INC.
FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2021
TABLE OF CONTENTS
BUSINESS
PART I
Item 1.
Item 1A. RISK FACTORS
Item 1B. UNRESOLVED STAFF COMMENTS
Item 2.
Item 3.
Item 4.
PROPERTIES
LEGAL PROCEEDINGS
MINE SAFETY DISCLOSURES
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
PART II
Item 5.
Item 6.
Item 7.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
[RESERVED]
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 8.
Item 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
Item 9A. CONTROLS AND PROCEDURES
Item 9B. OTHER INFORMATION
PART III
Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 11. EXECUTIVE COMPENSATION
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
PART IV
Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 16.
FORM 10-K SUMMARY
SIGNATURES
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No.
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PART I
ITEM 1. BUSINESS
...................................................................................................................................................................................................................................
Overview
AbbVie(1) is a global, diversified research-based biopharmaceutical company positioned for
success with a comprehensive product portfolio that has leadership positions across immunology,
hematologic oncology, neuroscience, aesthetics and eye care. AbbVie uses its expertise, dedicated
people and unique approach to innovation to develop and market advanced therapies that address some
of the world’s most complex and serious diseases.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an
independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of
100% of the outstanding common stock of AbbVie to Abbott’s shareholders.
Impact of the Coronavirus Disease 2019 (COVID-19)
The novel coronavirus (COVID-19) pandemic continues to spread throughout the United States
and around the world. As COVID-19 continues to have an impact worldwide, AbbVie is focused on the
health and safety of its employees, health care professionals and patients and communities. In the
continued operation of its business, AbbVie has followed health and safety guidance from relevant
health authorities, managed manufacturing and supply chain resources and monitored closely its clinical
trial sites. See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Impact of the Coronavirus Disease 2019 (COVID-19).”
Segments
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, development, 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. See Note 16, “Segment and
Geographic Area Information” to the Consolidated Financial Statements included under Item 8,
“Financial Statements and Supplementary Data” and the sales information related to AbbVie’s key
products and geographies included under Item 7, “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.”
Products
AbbVie’s portfolio of products includes a broad line of therapies that address some of the world’s
most complex and serious diseases.
Immunology products. AbbVie maintains an extensive immunology portfolio across rheumatology,
dermatology and gastroenterology. AbbVie’s immunology products address unmet needs for patients
with autoimmune diseases. These products are:
(1) As used throughout the text of this report on Form 10-K, the terms “AbbVie” or “the company” refer
to AbbVie Inc., a Delaware corporation, or AbbVie Inc. and its consolidated subsidiaries, as the
context requires.
2021 Form 10-K |
1
Humira. Humira (adalimumab) is a biologic therapy administered as a subcutaneous injection. It
is approved to treat the following autoimmune diseases in the United States, Canada and Mexico
(collectively, North America) and in the European Union:
Condition
Rheumatoid arthritis (moderate to severe)
Psoriatic arthritis
Ankylosing spondylitis
Adult Crohn’s disease (moderate to severe)
Plaque psoriasis (moderate to severe chronic)
Principal Markets
North America, European Union
North America, European Union
North America, European Union
North America, European Union
North America, European Union
Juvenile idiopathic arthritis (moderate to severe polyarticular)
North America, European Union
Ulcerative colitis (moderate to severe)
Axial spondyloarthropathy
Pediatric Crohn’s disease (moderate to severe)
Hidradenitis suppurativa (moderate to severe)
Pediatric enthesitis-related arthritis
Non-infectious intermediate, posterior and panuveitis
Pediatric ulcerative colitis (moderate to severe)
Pediatric uveitis
North America, European Union
European Union
North America, European Union
North America, European Union
European Union
North America, European Union
U.S., Canada, European Union
North America, European Union
Humira is also approved in Japan for the treatment of intestinal Behçet’s disease and pyoderma
gangrenosum.
Humira is sold in numerous other markets worldwide, including Japan, China, Brazil and Australia,
and accounted for approximately 37% of AbbVie’s total net revenues in 2021.
Skyrizi. Skyrizi (risankizumab) is an interleukin-23 (IL-23) inhibitor that selectively blocks IL-23 by
binding to its p19 subunit. It is a biologic therapy administered as a quarterly subcutaneous injection
following two induction doses. Skyrizi is approved in the United States, Canada, Mexico and the European
Union and is indicated for the treatment of moderate to severe plaque psoriasis in adults who are
candidates for systemic therapy or phototherapy. In the United States and the European Union, Skyrizi
is additionally approved for the treatment of active psoriatic arthritis in adult patients who have an
inadequate response or intolerance to disease-modifying antirheumatic drugs (DMARDs). In Japan,
Skyrizi is approved for the treatment of plaque psoriasis, generalized pustular psoriasis, erythrodermic
psoriasis and psoriatic arthritis in adult patients who have an inadequate response to conventional
therapies.
Rinvoq. Rinvoq (upadacitinib) is an oral, once-daily selective and reversible JAK inhibitor that is
approved to treat the following inflammatory diseases in North America, Japan and the European Union:
Condition
Rheumatoid arthritis (moderate to severe)
Psoriatic arthritis
Ankylosing spondylitis
Principal Markets
North America, European Union, Japan
U.S., Canada, European Union, Japan
European Union
Atopic dermatitis (moderate to severe)
U.S., Canada, European Union, Japan
In the United States, Rinvoq is indicated for both the treatment of moderate to severe active
rheumatoid arthritis, and for active psoriatic arthritis, in adult patients who have an inadequate response
or intolerance to one or more TNF blockers. It is also indicated for the treatment of moderate to
severe atopic dermatitis in adults and children 12 years of age and older whose disease is not adequately
controlled with other systemic drug products, including biologics, or when use of those therapies are
inadvisable.
Oncology products. AbbVie’s oncology products target some of the most complex and difficult-to-
treat cancers. These products are:
2
| 2021 Form 10-K
Imbruvica.
Imbruvica (ibrutinib) is an oral, once-daily therapy that inhibits a protein called
Bruton’s tyrosine kinase. Imbruvica was one of the first medicines to receive a United States Food and
Drug Administration (FDA) approval after being granted a Breakthrough Therapy Designation and is
one of the few therapies to receive four separate designations. Imbruvica currently is approved for the
treatment of adult patients with blood cancers such as chronic lymphocytic leukemia (CLL), as well as
certain forms of non-Hodgkin lymphoma.
Venclexta/Venclyxto. Venclexta (venetoclax) is a B-cell lymphoma 2 (BCL-2) inhibitor used to
treat hematological malignancies. Venclexta is approved by the FDA for adults with CLL or SLL. In
addition, Venclexta is approved in combination with azacitidine, or decitabine, or low-dose cytarabine to
treat adults with newly-diagnosed acute myeloid leukemia who are 75 years of age or older or have
other medical conditions that prevent the use of standard chemotherapy.
Aesthetics products. AbbVie’s Aesthetics portfolio consists of facial injectables, plastics and
regenerative medicine, body contouring and skincare products, which hold market-leading positions in
the U.S. and in key markets around the world. These products are:
Botox Cosmetic. Botox Cosmetic is an acetylcholine release inhibitor and a neuromuscular
blocking agent indicated for treatment in three areas: temporary improvement in the appearance of
moderate to severe glabellar lines (frown lines between the eyebrows), moderate to severe crow’s feet
and moderate to severe forehead lines in adults. Having received its initial FDA approval in 2002, Botox
Cosmetic is now approved for use in all major markets around the world and has become one of the
world’s most recognized and iconic brands.
The Juvederm Collection of Fillers. The Juvederm Collection of Fillers is a portfolio of hyaluronic
acid-based dermal fillers with a variety of approved indications in the U.S. and in other major markets
around the world to augment or treat volume loss in the cheeks, chin, lips and lower face.
Other aesthetics. Other aesthetics products include, but are not limited to, Coolsculpting body
contouring technology, Alloderm regenerative dermal tissue, Natrelle breast implants, the SkinMedica
skincare line and DiamondGlow dermabrasion technology.
Neuroscience products. AbbVie’s neuroscience products address some of the most difficult-to-
treat neurologic diseases. These products are:
Botox Therapeutic. Botox Therapeutic (onabotulinumtoxinA injection) is a neuromuscular blocking
agent that is injected into muscle tissue in treatment for the following indications in the United States:
• Prophylaxis of headaches in adult patients with chronic migraine (≥ 15 days per month with
headache lasting 4 hours a day or longer).
• Overactive bladder with symptoms of urge urinary incontinence, urgency and frequency, in adults
who have an inadequate response to or are intolerant of an anticholinergic medication.
• Urinary incontinence due to detrusor overactivity associated with a neurologic condition (e.g.,
spinal cord injury, multiple sclerosis) in adults who have an inadequate response to or are intolerant
of an anticholinergic medication.
• Spasticity in patients 2 years of age and older.
• Cervical dystonia in adults to reduce the severity of abnormal head position and neck pain
associated with cervical dystonia.
• Strabismus and blepharospasm associated with dystonia, including benign essential
blepharospasm or VII nerve disorders in patients 12 years of age and older.
• Severe primary axillary hyperhidrosis that is inadequately managed with topical agents. Licenses
around the world vary.
• Focal spasticity associated with dynamic equinus foot deformity due to spasticity in ambulant
pediatric cerebral palsy patients 2 years of age or older.
• Focal spasticity of the wrist and hand in adult post stroke patients.
2021 Form 10-K |
3
• Focal spasticity of the ankle and foot in adult post stroke patients.
Vraylar. Vraylar (cariprazine) is a dopamine D3-preferring D3/D2 receptor partial agonist and a
5-HT1A receptor partial agonist. Its D3 binding profile may be linked to observed improvements in the
negative symptoms of schizophrenia and to antidepressant effects in bipolar I disorder (bipolar
depression). Vraylar is indicated for acute and maintenance treatment of schizophrenia in adults, acute
treatment of manic or mixed episodes associated with bipolar disorder in adults and acute treatment
of depressive episodes associated with bipolar I disorder in adults.
Duopa and Duodopa (carbidopa and levodopa). AbbVie’s levodopa-carbidopa intestinal gel for
the treatment of advanced Parkinson’s disease is marketed as Duopa in the United States and as
Duodopa outside of the United States.
Ubrelvy. Ubrelvy (ubrogepant) is indicated for the acute treatment of migraine with or without
aura in adults and is only commercialized in the United States.
Other neuroscience. Other neuroscience products include Qulipta (atogepant), which is indicated
for preventive treatment of episodic migraine in adults.
Eye care products. AbbVie’s eye care products address unmet needs and new approaches to
help preserve and protect patients’ vision. These products are:
Lumigan/Ganfort. Lumigan (bimatoprost ophthalmic solution) 0.01% is a once daily, topical
prostaglandin analog indicated for the reduction of elevated intraocular pressure (IOP) in patients with
open angle glaucoma (OAG) or ocular hypertension (OHT). Ganfort is a once daily topical fixed
combination of bimatoprost 0.03% and timolol 0.5% for the reduction of IOP in adult patients with OAG
or OHT. Lumigan is sold in the United States and numerous markets around the world, while Ganfort
is approved in the European Union and some markets in South America, the Middle East and Asia.
Alphagan/Combigan. Alphagan (brimonidine tartrate ophthalmic solution) is an alpha-
adrenergic receptor agonist indicated for the reduction of elevated IOP in patients with open-angle
glaucoma or ocular hypertension. Combigan (brimonidine tartrate/timolol maleate ophthalmic solution)
is approved for reducing elevated IOP in patients with glaucoma who require additional or adjunctive
IOP-lowering therapy. Both Alphagan and Combigan are available for sale in the United States and
numerous markets around the world.
Restasis. Restasis is a calcineurin inhibitor immunosuppressant indicated to increase tear
production in patients whose tear production is presumed to be suppressed due to ocular inflammation
associated with keratoconjunctivitis sicca. Restasis is approved in the United States and a number of
other markets in South America, the Middle East and Asia.
Other eye care. Other eye care products include Xen, Durysta, Ozurdex, Refresh/Optive and
Vuity.
Women’s health products. AbbVie’s women’s health products are:
Lo Loestrin. Lo Loestrin Fe is an oral contraceptive. It is indicated for prevention of pregnancy
with the lowest dose of estrogen with only 10mcg and is dispensed in a unique 24/2/2 regimen with a two-
day hormone-free interval. It is marketed in the U.S. as Lo Loestrin Fe (norethindrone acetate and
ethinyl estradiol tablets, ethinyl estradiol tablets and ferrous fumarate tablets) and in select markets
outside the U.S. as Lolo.
Orilissa/Oriahnn. Orilissa (elagolix) is the first and only orally-administered, nonpeptide small
molecule gonadotropin-releasing hormone (GnRH) antagonist specifically developed for women with
moderate to severe endometriosis pain. It represents the first FDA-approved oral treatment for the
management of moderate to severe pain associated with endometriosis in over a decade. Orilissa inhibits
endogenous GnRH signaling by binding competitively to GnRH receptors in the pituitary gland.
Administration results in dose-dependent suppression of luteinizing hormone and follicle-stimulating
hormone, leading to decreased blood concentrations of ovarian sex hormones, estradiol and
progesterone. Outside the United States, Orilissa is also launched in Canada. Oriahnn (elagolix,
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| 2021 Form 10-K
estradiol and norethindrone acetate capsules; elagolix capsules) is a combination prescription medicine
used to control heavy menstrual bleeding related to uterine fibroids in women before menopause.
Other women’s health. Other women’s health includes Liletta, a sterile, levonorgestrel-releasing
intrauterine system indicated for prevention of pregnancy for up to six years.
Other key products. AbbVie’s other key products include, among other things, treatments for
patients with hepatitis C virus (HCV), metabolic and hormone products that target a number of
conditions, including exocrine pancreatic insufficiency and hypothyroidism, as well as endocrinology
products for the palliative treatment of advanced prostate cancer, treatment of endometriosis and central
precocious puberty and for the preoperative treatment of patients with anemia caused by uterine
fibroids. These products are:
Mavyret/Maviret. Mavyret (glecaprevir/pibrentasvir) is approved in the United States and European
Union (Maviret) for the treatment of adult and pediatric patients (12 years and older or weighing at least
45 kilograms) with chronic HCV genotype 1-6 infection without cirrhosis and with compensated
cirrhosis (Child-Pugh A). It is also indicated for the treatment of adult and pediatric patients (12 years
and older or weighing at least 45 kilograms) with HCV genotype 1 infection, who previously have been
treated with a regimen containing an HCV NS5A inhibitor or an NS3/4A protease inhibitor, but not
both. It is an 8-week, pan-genotypic treatment for patients without cirrhosis and following the
EXPEDITION-8 study, also in patients with compensated cirrhosis who are new to treatment.
Creon. Creon (pancrelipase) is a pancreatic enzyme therapy for exocrine pancreatic insufficiency,
a condition that occurs in patients with cystic fibrosis, chronic pancreatitis and several other conditions.
Lupron. Lupron (leuprolide acetate), which is also marketed as Lucrin and Lupron Depot, is a
product for the palliative treatment of advanced prostate cancer, treatment of endometriosis and
central precocious puberty and for the preoperative treatment of patients with anemia caused by uterine
fibroids. Lupron is approved for daily subcutaneous injection and one-month, three-month, four-month
and six-month intramuscular injection.
Linzess/Constella. Linzess (linaclotide) is a once-daily guanylate cyclase-C agonist used in adults
to treat irritable bowel syndrome with constipation (IBS-C) and chronic idiopathic constipation (CIC). The
product is marketed as Linzess in the United States and as Constella outside of the United States.
Synthroid. Synthroid (levothyroxine sodium tablets, USP) is used in the treatment of hypothyroidism.
AbbVie has the rights to sell Creon and Synthroid only in the United States.
Marketing, Sales and Distribution Capabilities
AbbVie utilizes a combination of dedicated commercial resources, regional commercial resources
and distributorships to market, sell and distribute its products worldwide. AbbVie directs its primary
marketing efforts toward securing the prescription, or recommendation, of its brand of products by
physicians, key opinion leaders and other health care providers. Managed care providers (for example,
health maintenance organizations and pharmacy benefit managers), hospitals and state and federal
government agencies (for example, the United States Department of Veterans Affairs and the United
States Department of Defense) are also important customers. AbbVie also markets directly to consumers
themselves, although in the United States many of the company’s products must be sold pursuant to
a prescription. Outside of the United States, AbbVie focuses its promotional and market access efforts
on key opinion leaders, payers, physicians and health systems. AbbVie also provides patient support
programs closely related to its products. Throughout the COVID-19 pandemic AbbVie has maintained its
promotional activities with key stakeholders by leveraging digital engagement where permitted and in
compliance with the locally applicable government guidance.
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. Although AbbVie’s
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business does not have significant seasonality, AbbVie’s product revenues may be affected by end
customer and retail buying patterns, fluctuations in wholesaler inventory levels and other factors.
In the United States, AbbVie distributes pharmaceutical products principally through independent
wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. In
2021, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen
Corporation) accounted for substantially all of AbbVie’s pharmaceutical product sales in the United
States. No individual wholesaler accounted for greater than 37% of AbbVie’s 2021 gross revenues in
the United States. Outside the United States, AbbVie sells products primarily to customers or through
distributors, depending on the market served.
Certain products are co-marketed or co-promoted with other companies. AbbVie has no single
customer that, if the customer were lost, would have a material adverse effect on the company’s
business. No material portion of AbbVie’s business is subject to renegotiation of profits or termination
of contracts at the election of the government. Orders are generally filled on a current basis and order
backlog is not material to AbbVie’s business.
Competition
The markets for AbbVie’s products are highly competitive. AbbVie competes with other research-
based pharmaceuticals and biotechnology companies that discover, manufacture, market and sell
proprietary pharmaceutical products, therapies and biologics. For example, Humira competes with anti-
TNF products, JAK inhibitors and other competitive products intended to treat a number of disease
states and Mavyret/Maviret competes with other available HCV treatment options. In addition, in the past
few years, a number of other companies have started to develop, have successfully developed and/or
are currently marketing products that are being positioned as competitors to Botox. The search for
technological innovations in pharmaceutical products is a significant aspect of competition. The
introduction of new products by competitors and changes in medical practices and procedures can
result in product obsolescence. Price is also a competitive factor. In addition, the substitution of generic
pharmaceutical products for branded conventional (small-molecule) pharmaceutical products creates
competitive pressures on AbbVie’s products that do not have patent protection. New products or
treatments brought to market by AbbVie’s competitors could cause revenues for AbbVie’s products to
decrease due to price reductions and sales volume decreases.
Biosimilars. Competition for AbbVie’s biologic products is affected by the approval of follow-on
biologics, also known as “biosimilars.” Biologics have added major therapeutic options for the treatment
of many diseases, including some for which therapies were unavailable or inadequate. The cost of
developing and producing biologic therapies is typically dramatically higher than for small molecule
medications, and many biologic medications are used for ongoing treatment of chronic diseases, such
as rheumatoid arthritis or inflammatory bowel disease, or for the treatment of previously untreatable
cancer. Significant investments in biologics infrastructure and manufacturing are necessary to produce
biologic products.
Humira is now facing direct biosimilar competition in Europe and other countries, and AbbVie will
continue to face competitive pressure from these biologics and from orally administered products.
In the United States, the FDA regulates biologics under the Federal Food, Drug, and Cosmetic Act
(the FFDCA), the Public Health Service Act (PHSA) and the regulations implementing these statutes.
The enactment of federal health care reform legislation in March 2010 provided a pathway for approval
of biosimilars under the PHSA, but the approval process for, and science behind, biosimilars is
complex. Approval by the FDA is dependent upon many factors, including a showing that the biosimilar
is “highly similar” to the original product and has no clinically meaningful differences from the original
product in terms of safety, purity and potency. The types of data that could ordinarily be required in an
application to show similarity may include analytical data, bioequivalence studies and studies to
demonstrate chemical similarity, animal studies (including toxicity studies) and clinical studies.
Furthermore, the law provides that only a biosimilar product that is determined to be “interchangeable”
will be considered by the FDA as substitutable for the original biologic product without the intervention
of the health care provider who prescribed the original biologic product. To prove that a biosimilar product
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| 2021 Form 10-K
is interchangeable, the applicant must demonstrate that the product can be expected to produce the
same clinical results as the original biologic product in any given patient, and if the product is administered
more than once in a patient, that safety risks and potential for diminished efficacy of alternating or
switching between the use of the interchangeable biosimilar biologic product and the original biologic
product is no greater than the risk of using the original biologic product without switching. The law
continues to be interpreted and implemented by the FDA. As a result, its full ultimate impact,
implementation and meaning remains subject to uncertainty.
Intellectual Property Protection and Regulatory Exclusivity
Generally, upon approval, products may be entitled to certain kinds of exclusivity under applicable
intellectual property and regulatory regimes. AbbVie’s intellectual property is materially valuable to the
company, and AbbVie seeks patent protection, where available, in all significant markets and/or
countries for each product in development. In the United States, the expiration date for patents is
20 years after the filing date. Given that patents relating to pharmaceutical products are often obtained
early in the development process and given the amount of time needed to complete clinical trials and
other development activities required for regulatory approval, the length of time between product launch
and patent expiration is significantly less than 20 years. The Drug Price Competition and Patent Term
Restoration Act of 1984 (commonly known as the Hatch-Waxman Act) permits a patent holder to seek a
patent extension, commonly called a “patent term restoration,” for patents on products (or processes
for making the product) regulated by the FFDCA. The length of the patent extension is roughly based on
50 percent of the period of time from the filing of an Investigational New Drug Application (NDA) for a
compound to the submission of the NDA for such compound, plus 100 percent of the time period from
NDA submission to regulatory approval. The extension, however, cannot exceed five years and the
patent term remaining after regulatory approval cannot exceed 14 years. Biological products licensed
under the PHSA are similarly eligible for terms of patent restoration.
Pharmaceutical products may be entitled to other forms of legal or regulatory exclusivity upon
approval. The scope, length and requirements for each of these exclusivities vary both in the United
States and in other jurisdictions. In the United States, if the FDA approves a conventional drug product
that contains an active ingredient not previously approved, the product is typically entitled to five years
of non-patent regulatory exclusivity. Specific conditions of use approved for individual products may also
be entitled to three years of exclusivity if approval was based on the FDA’s reliance on new clinical
studies essential to approval submitted by the NDA applicant. If the NDA applicant studies the product
for use by children, the FDA may grant pediatric exclusivity, which extends by 180 days all existing
exclusivities (patent and regulatory) related to the product. For products that are either used to treat
conditions that afflict a relatively small population or for which there is not a reasonable expectation that
the research and development costs will be recovered, the FDA may designate the pharmaceutical as
an orphan drug and grant it seven years of exclusivity. Other types of regulatory exclusivity may also be
available, such as Generating New Antibiotic Incentives Now (GAIN) exclusivity, which can provide
new antibiotic or new antifungal drugs an additional five years of exclusivity to be added to certain
exclusivities already provided for by law.
Applicable laws and regulations dictate the scope of any exclusivity to which a product or particular
characteristics of a product is entitled upon approval in any particular country. In certain instances,
regulatory exclusivity may offer protection where patent protection is no longer available or for a period
of time in excess of patent protection. It is not possible to estimate for each product in development
the total period and scope of exclusivity to which it may become entitled until regulatory approval is
obtained or sometimes even later. However, given the length of time required to complete clinical
development of a pharmaceutical product, the periods of exclusivity that might be achieved in any
individual case would not generally be expected to exceed a minimum of three years and a maximum
of 14 years. These estimates do not consider other factors, such as the difficulty of recreating the
manufacturing process for a particular product or other proprietary knowledge that may delay the
introduction of a generic or other follow-on product after the expiration of applicable patent and other
regulatory exclusivity periods.
Biologics may be entitled to exclusivity under the Biologics Price Competition and Innovation Act,
which was passed on March 23, 2010 as Title VII to the Patient Protection and Affordable Care Act.
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7
The law provides a pathway for approval of biosimilars following the expiration of 12 years of regulatory
exclusivity for the innovator biologic and a potential additional 180 day-extension term for conducting
pediatric studies. Biologics are also eligible for orphan drug exclusivity, as discussed above. The law also
includes an extensive process for the innovator biologic and biosimilar manufacturer to litigate patent
infringement, validity and enforceability. The European Union has also created a pathway for approval of
biosimilars and has published guidelines for approval of certain biosimilar products. The more complex
nature of biologics and biosimilar products has led to close regulatory scrutiny over follow-on biosimilar
products, which can reduce the effect of biosimilars on sales of the innovator biologic as compared to the
sales erosion caused by generic versions of small molecule pharmaceutical products.
AbbVie owns or has licensed rights to a substantial number of patents and patent applications.
AbbVie licenses or owns a patent portfolio of thousands of patent families, each of which includes
United States patent applications and/or issued patents and may also contain the non-United States
counterparts to these patents and applications.
These patents and applications, including various patents that expire during the period 2022 to the
early 2040s, in aggregate are believed to be of material importance in the operation of AbbVie’s
business. However, AbbVie believes that no single patent, license, trademark (or related group of
patents, licenses, or trademarks), except for those related to adalimumab (which is sold under the
trademark Humira), are material in relation to the company’s business as a whole. The United States
composition of matter (that is, compound) patent covering adalimumab expired in December 2016,
and the equivalent European Union patent expired in October 2018 in the majority of European Union
countries. In the United States, non-composition of matter patents covering adalimumab expire no earlier
than 2022. AbbVie has entered into settlement and license agreements with several adalimumab
biosimilar manufactures. Under the agreements, the licenses in the United States will begin in 2023
and the licenses in Europe began in 2018.
In addition, the following patents, licenses and trademarks are significant: those related to ibrutinib
(which is sold under the trademark Imbruvica) and those related to risankizumab (which is sold under
the trademark Skyrizi). The United States composition of matter patent covering ibrutinib is expected to
expire in 2027, however no generic entry for any ibrutinib product is expected prior to March 30, 2032,
assuming pediatric exclusivity is granted. The United States composition of matter patent covering
risankizumab is expected to expire in 2033.
AbbVie may rely, in some circumstances, on trade secrets to protect its technology. AbbVie seeks
to protect its technology and product candidates, in part, by confidentiality agreements with its employees,
consultants, advisors, contractors and collaborators. These agreements may be breached and AbbVie
may not have adequate remedies for any breach. In addition, AbbVie’s trade secrets may otherwise
become known or be independently discovered by competitors. To the extent that AbbVie’s employees,
consultants, advisors, contractors and collaborators use intellectual property owned by others in their
work for the company, disputes may arise as to the rights in related or resulting know-how and
inventions.
Licensing, Acquisitions and Other Arrangements
In addition to its independent efforts to develop and market products, AbbVie enters into
arrangements such as acquisitions, option-to-acquire agreements, licensing arrangements, option-to-
license arrangements, strategic alliances, co-promotion arrangements, co-development and co-marketing
agreements and joint ventures. The acquisitions and option-to-acquire agreements typically include,
among other terms and conditions, non-refundable purchase price payments or option fees, option
exercise payments, milestones or earn-outs and other customary terms and obligations. The licensing
and other arrangements typically include, among other terms and conditions, non-refundable upfront
license fees, option fees and option exercise payments, milestone payments and royalty and/or profit
sharing obligations. See Note 5, “Licensing, Acquisitions and Other Arrangements—Other Licensing &
Acquisitions Activity,” to the Consolidated Financial Statements included under Item 8, “Financial
Statements and Supplementary Data.”
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| 2021 Form 10-K
Third Party Agreements
AbbVie has agreements with third parties for process development, product distribution, analytical
services and manufacturing of certain products. AbbVie procures certain products and services from a
limited number of suppliers and, in some cases, a single supply source. In addition, AbbVie has
agreements with third parties for active pharmaceutical ingredient and product manufacturing,
formulation and development services, fill, finish and packaging services, transportation and distribution
and logistics services for certain products. AbbVie does not believe that these manufacturing related
agreements are material because AbbVie’s business is not substantially dependent on any individual
agreement. In most cases, AbbVie maintains alternate supply relationships that it can utilize without
undue disruption of its manufacturing processes if a third party fails to perform its contractual
obligations. AbbVie seeks to maintain sufficient inventory of product to minimize the impact of any
supply disruption.
AbbVie is also party to certain collaborations and other arrangements, as discussed in Note 5,
“Licensing, Acquisitions and Other Arrangements—Other Licensing & Acquisitions Activity,” to the
Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary
Data.”
Sources and Availability of Raw Materials
AbbVie purchases, in the ordinary course of business, raw materials and supplies essential to its
operations from numerous suppliers around the world. In addition, certain medical devices and
components necessary for the manufacture of AbbVie products are provided by unaffiliated third party
suppliers. Despite the disruption to the global supply chain caused by COVID-19, AbbVie has
continued to supply patients with no material supply impact, except for the previously-disclosed
near-term supply issues impacting Lupron. Given the general increased global volatility due to the
pandemic, AbbVie is monitoring and taking actions to mitigate potential supply shortages which may
impact the fulfillment of product demand.
Research and Development Activities
AbbVie makes a significant investment in research and development and has numerous compounds
(and complementary devices) in clinical development, including potential treatments for complex, life-
threatening diseases. AbbVie’s ability to discover and develop new compounds is enhanced by the
company’s use of integrated discovery and development project teams, which include chemists,
biologists, physicians and pharmacologists who work on the same compounds as a team. AbbVie also
partners with third parties, such as biotechnology companies, other pharmaceutical companies and
academic institutions to identify and prioritize promising new treatments that complement and enhance
AbbVie’s existing portfolio. AbbVie also supplements its research and development efforts with
acquisitions.
The research and development process generally begins with discovery research which focuses on
the identification of a molecule that has a desired effect against a given disease. If preclinical testing of
an identified compound proves successful, the compound moves into clinical development which
generally includes the following phases:
• Phase 1—involves the first human tests in a small number of healthy volunteers or patients to
assess safety, tolerability and doses for later phases.
• Phase 2—tests different doses of the drug in a disease state in order to assess efficacy.
• Phase 3—tests a drug that demonstrates favorable results in the earlier phases in a significantly
larger patient population to further demonstrate efficacy and safety in order to meet requirements
to enable global approval.
Preclinical data and clinical trials from all of the development phases provide the data required to
prepare and submit an NDA, a Biological License Application (BLA) or other submission for regulatory
approval to the FDA or similar government agencies outside the United States. The specific requirements
(e.g., scope of clinical trials) for obtaining regulatory approval vary across different countries and
geographic regions.
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The research and development process from discovery through a new drug launch typically takes
8 to 12 years and can be even longer. The research and development of new pharmaceutical products
has a significant amount of inherent uncertainty. There is no guarantee when, or if, a molecule will
receive the regulatory approval required to launch a new drug or indication.
In addition to the development of new products, delivery devices, and new formulations, research
and development projects also may include Phase 4 trials, sometimes called post-marketing studies.
For such projects, clinical trials are designed and conducted to collect additional data regarding, among
other parameters, the benefits and risks of an approved drug.
Regulation—Discovery and Clinical Development
United States. Securing approval to market a new pharmaceutical product in the United States
requires substantial effort and financial resources and takes several years to complete. The applicant
must complete preclinical tests and submit protocols to the FDA before commencing clinical trials. Clinical
trials are intended to establish the safety and efficacy of the pharmaceutical product and typically are
conducted in sequential phases, although the phases may overlap or be combined. If the required clinical
testing is successful, the results are submitted to the FDA in the form of an NDA or BLA requesting
approval to market the product for one or more indications. The FDA reviews an NDA or BLA to determine
whether a product is safe and effective for its intended use and whether its manufacturing is compliant
with current Good Manufacturing Practices (cGMP).
Compliance with regulatory requirements is assured through periodic, announced or unannounced
inspections by the FDA and other regulatory authorities, and these inspections associated with clinical
development may include the sponsor, investigator sites, laboratories, hospitals and manufacturing
facilities of AbbVie’s subcontractors or other third-party manufacturers. Failure to comply with applicable
regulatory requirements can result in enforcement action by the FDA, including rejection of an NDA or
BLA.
Even if an NDA or a BLA receives approval, the applicant must comply with post-approval
requirements. For example, holders of an approval must report adverse reactions, provide updated
safety and efficacy information and comply with requirements concerning advertising and promotional
materials and activities. Also, quality control and manufacturing procedures must continue to conform to
cGMP after approval, and certain changes to the manufacturing procedures and finished product
must be submitted and approved by the FDA prior to implementation. The FDA periodically inspects
manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural and
record keeping requirements. In addition, as a condition of approval, the FDA may require post-marketing
testing and surveillance to further assess and monitor the product’s safety or efficacy after
commercialization, which may require additional clinical trials, patient registries, observational data or
additional work on chemistry, manufacturing and controls. Any post-approval regulatory obligations, and
the cost of complying with such obligations, could expand in the future. Further, the FDA continues to
regulate product labeling, and prohibits the promotion of products for unapproved or “off-label” uses
along with other labeling restrictions.
Outside the United States. AbbVie is subject to similar regulatory requirements outside the
United States for approval and marketing of pharmaceutical products. AbbVie must obtain approval of
a clinical trial application or product from applicable supervising regulatory authorities before it can
commence clinical trials or marketing of the product in target markets. The approval requirements
and process for each country can vary, and the time required to obtain approval may be longer or shorter
than that required for FDA approval in the United States. For example, AbbVie may submit marketing
authorizations in the European Union under either a centralized or decentralized procedure. The
centralized procedure is mandatory for the approval of biotechnology products and many pharmaceutical
products and provides for a single marketing authorization that is valid for all European Union member
states. Under the centralized procedure, a single marketing authorization application is submitted to the
European Medicines Agency. After the agency evaluates the application, it makes a recommendation
to the European Commission, which then makes the final determination on whether to approve the
application. The decentralized procedure provides for mutual recognition of individual national approval
decisions and is available for products that are not subject to the centralized procedure.
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| 2021 Form 10-K
In Japan, applications for approval of a new product are made through the Pharmaceutical and
Medical Devices Agency (PMDA). Japan-specific trials and/or bridging studies to demonstrate that the
non-Japanese clinical data applies to Japanese patients may be required. After completing a
comprehensive review, the PMDA reports to the Ministry of Health, Labour and Welfare, which then
approves or denies the application.
Similarly, applications for a new product in China are submitted to the Center for Drug Evaluation
(CDE) of the National Medical Products Administration for technical review and approval of a product
for marketing in China. Clinical data in Chinese subjects are usually required to support approval in
China, requiring the inclusion of China in global pivotal studies, or a separate China/Asian clinical
trial.
The regulatory process in many emerging markets continues to evolve. Many emerging markets,
including those in Asia, generally require regulatory approval to have been obtained in a large developed
market (such as the United States or Europe) before the country will begin or complete its regulatory
review process. Similar to the requirements in Japan and China, certain countries (notably South Korea,
Taiwan, India and Russia) also generally require that local clinical studies be conducted in order to
support regulatory approval in the country.
The requirements governing the conduct of clinical trials and product licensing also vary. In
addition, post-approval regulatory obligations such as adverse event reporting and cGMP compliance
generally apply and may vary by country. For example, after a marketing authorization has been granted
in the European Union, periodic safety reports must be submitted and other pharmacovigilance
measures may be required (such as Risk Management Plans).
Regulation—Commercialization, Distribution and Manufacturing
The manufacturing, marketing, sale, promotion and distribution of AbbVie’s products are subject to
comprehensive government regulation. Government regulation by various national, regional, federal,
state and local agencies, both in the United States and other countries, addresses (among other matters)
inspection of, and controls over, research and laboratory procedures, clinical investigations, product
approvals and manufacturing, labeling, packaging, marketing and promotion, pricing and reimbursement,
sampling, distribution, quality control, post-marketing surveillance, record keeping, storage and
disposal practices. AbbVie’s operations are also affected by trade regulations in many countries that
limit the import of raw materials and finished products and by laws and regulations that seek to prevent
corruption and bribery in the marketplace (including the United States Foreign Corrupt Practices Act
and the United Kingdom Bribery Act, which provide guidance on corporate interactions with government
officials) and require safeguards for the protection of personal data. In addition, AbbVie is subject to
laws and regulations pertaining to health care fraud and abuse, including state and federal anti-
kickback and false claims laws in the United States. Prescription drug manufacturers such as AbbVie are
also subject to taxes, as well as application, product, user and other fees.
Compliance with these laws and regulations is costly and materially affects AbbVie’s business.
Among other effects, health care regulations substantially increase the time, difficulty and costs incurred
in obtaining and maintaining approval to market newly developed and existing products. AbbVie
expects compliance with these regulations to continue to require significant technical expertise and
capital investment to ensure compliance. Failure to comply can delay the release of a new product or
result in regulatory and enforcement actions, the seizure or recall of a product, the suspension or
revocation of the authority necessary for a product’s production and sale and other civil or criminal
sanctions, including fines and penalties.
In addition to regulatory initiatives, AbbVie’s business can be affected by ongoing studies of the
utilization, safety, efficacy and outcomes of health care products and their components that are regularly
conducted by industry participants, government agencies and others. These studies can lead to
updates to the data regarding utilization, safety and efficacy of previously marketed products. In some
cases, these studies have resulted, and may in the future result, in the discontinuance of, or limitations on,
marketing of such products domestically or worldwide, and may give rise to claims for damages from
persons who believe they have been injured as a result of their use.
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Access to human health care products continues to be a subject of oversight, investigation and
action by governmental agencies, legislative bodies and private organizations in the United States and
other countries. A major focus is cost containment. Efforts to reduce health care costs are also being
made in the private sector, notably by health care payers and providers, which have instituted various cost
reduction and containment measures. AbbVie expects insurers and providers to continue attempts to
reduce the cost of health care products. Outside the United States, many countries control the price of
health care products directly or indirectly, through reimbursement, payment, pricing, coverage
limitations, or compulsory licensing. Political and budgetary pressures in the United States and in other
countries may also heighten the scope and severity of pricing pressures on AbbVie’s products for the
foreseeable future.
United States. Specifically, U.S. federal laws require pharmaceutical manufacturers to pay certain
statutorily-prescribed rebates to state Medicaid programs on prescription drugs reimbursed under state
Medicaid plans, and the efforts by states to seek additional rebates may affect AbbVie’s business.
Similarly, the Veterans Health Care Act of 1992, as a prerequisite to participation in Medicaid and other
federal health care programs, requires that manufacturers extend additional discounts on pharmaceutical
products to various federal agencies, including the United States Department of Veterans Affairs,
Department of Defense and Public Health Service entities and institutions. In addition, recent legislative
changes would require similarly discounted prices to be offered to TRICARE program beneficiaries.
The Veterans Health Care Act of 1992 also established the 340B drug discount program, which requires
pharmaceutical manufacturers to provide products at reduced prices to various designated health
care entities and facilities.
In the United States, most states also have generic substitution legislation requiring or permitting a
dispensing pharmacist to substitute a different manufacturer’s generic version of a pharmaceutical
product for the one prescribed. In addition, the federal government follows a diagnosis-related group
(DRG) payment system for certain institutional services provided under Medicare or Medicaid and has
implemented a prospective payment system (PPS) for services delivered in hospital outpatient, nursing
home and home health settings. DRG and PPS entitle a health care facility to a fixed reimbursement
based on the diagnosis and/or procedure rather than actual costs incurred in patient treatment, thereby
increasing the incentive for the facility to limit or control expenditures for many health care products.
Medicare reimburses Part B drugs based on average sales price plus a certain percentage to account
for physician administration costs, which have been reduced in the hospital outpatient setting. Medicare
enters into contracts with private plans to negotiate prices for most patient-administered medicine
delivered under Part D.
Under the Patient Protection and Affordable Care Act and the Health Care and Education
Reconciliation Act (together, the Affordable Care Act), AbbVie pays a fee related to its pharmaceuticals
sales to government programs. In addition, AbbVie provides a discount of 70% for branded prescription
drugs sold to patients who fall into the Medicare Part D coverage gap, or “donut hole.”
The Affordable Care Act also includes provisions known as the Physician Payments Sunshine Act,
which require manufacturers of drugs and biologics covered under Medicare and Medicaid to record
any transfers of value to physicians and teaching hospitals and to report this data to the Centers for
Medicare and Medicaid Services for subsequent public disclosure. Similar reporting requirements have
also been enacted on the state level in the United States, and an increasing number of countries
worldwide either have adopted or are considering similar laws requiring disclosure of interactions with
health care professionals. Failure to report appropriate data may result in civil or criminal fines and/or
penalties.
AbbVie expects debate to continue during 2022 at all government levels worldwide over the
marketing, availability, method of delivery and payment for health care products and services. AbbVie
believes that future legislation and regulation in the markets it serves could affect access to health care
products and services, increase rebates, reduce prices or the rate of price increases for health care
products and services, change health care delivery systems, create new fees and obligations for the
pharmaceuticals industry, or require additional reporting and disclosure. It is difficult to predict the extent
to which AbbVie or the health care industry in general might be affected by the matters discussed
above.
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| 2021 Form 10-K
European Union. The European Union has adopted directives and other legislation governing
labeling, advertising, distribution, supply, pharmacovigilance and marketing of pharmaceutical products.
Such legislation provides mandatory standards throughout the European Union and permits member
states to supplement these standards with additional regulations. European governments also regulate
pharmaceutical product prices through their control of national health care systems that fund a large
part of the cost of such products to consumers. As a result, patients are unlikely to use a pharmaceutical
product that is not reimbursed by the government. In many European countries, the government either
regulates the pricing of a new product at launch or subsequent to launch through direct price controls or
reference pricing. In recent years, many countries have also imposed new or additional cost
containment measures on pharmaceutical products. Differences between national pricing regimes
create price differentials within the European Union that can lead to significant parallel trade in
pharmaceutical products.
Most governments also promote generic substitution by mandating or permitting a pharmacist to
substitute a different manufacturer’s generic version of a pharmaceutical product for the one prescribed
and by permitting or mandating that health care professionals prescribe generic versions in certain
circumstances. Many governments are also following a similar path for biosimilar therapies. In addition,
governments use reimbursement lists to limit the pharmaceutical products that are eligible for
reimbursement by national health care systems.
Japan. In Japan, the National Health Insurance system maintains a Drug Price List specifying
which pharmaceutical products are eligible for reimbursement, and the Ministry of Health, Labour and
Welfare sets the prices of the products on this list. The government generally introduces price cut rounds
every other year and also mandates price decreases for specific products. New products judged
innovative or useful, that are indicated for pediatric use, or that target orphan or small population
diseases, however, may be eligible for a pricing premium. The government has also promoted the use
of generics, where available.
Emerging Markets. Many emerging markets take steps to reduce pharmaceutical product prices,
in some cases through direct price controls and in others through the promotion of generic/biosimilar
alternatives to branded pharmaceuticals.
Since AbbVie markets its products worldwide, certain products of a local nature and variations of
product lines must also meet other local regulatory requirements. Certain additional risks are inherent
in conducting business outside the United States, including price and currency exchange controls,
changes in currency exchange rates, limitations on participation in local enterprises, expropriation,
nationalization and other governmental action.
Regulation—Medical Devices
Medical devices are subject to regulation by the FDA, state agencies and foreign government
health authorities. FDA regulations, as well as various U.S. federal and state laws, govern the
development, clinical testing, manufacturing, labeling, record keeping and marketing of medical device
products agencies in the United States. AbbVie’s medical device product candidates, including
AbbVie’s breast implants, must undergo rigorous clinical testing and an extensive government regulatory
clearance or approval process prior to sale in the United States and other countries. The lengthy
process of clinical development and submissions for clearance or approval, and the continuing need
for compliance with applicable laws and regulations, require the expenditure of substantial resources.
Regulatory clearance or approval, when and if obtained, may be limited in scope, and may significantly
limit the indicated uses for which a product may be marketed. Cleared or approved products and their
manufacturers are subject to ongoing review, and discovery of previously unknown problems with
products may result in restrictions on their manufacture, sale and/or use or require their withdrawal from
the market.
United States. AbbVie’s medical device products are subject to extensive regulation by the FDA in
the United States. Unless an exemption applies, each medical device AbbVie markets in the United
States must have a 510(k) clearance or a Premarket Approval Application (PMA) in accordance with the
FFDCA and its implementing regulations. The FDA classifies medical devices into one of three
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13
classes, depending on the degree of risk associated with each medical device and the extent of
controls that are needed to ensure safety and effectiveness. Devices deemed to pose a lower risk are
placed in either Class I or Class II, and devices deemed by the FDA to pose the greatest risk, such as life-
sustaining, life-supporting or implantable devices, or a device deemed to be not substantially equivalent
to a previously cleared 510(k) device, are placed in Class III. In general, a Class III device cannot be
marketed in the United States unless the FDA approves the device after submission of a PMA, and any
changes to the device subsequent to initial FDA approval must also be reviewed and approved by the
FDA. The majority of AbbVie’s medical device products, including AbbVie’s breast implants, are regulated
as Class III medical devices. A Class III device may have significant additional obligations imposed in
its conditions of approval, and the time in which it takes to obtain approval can be long. Compliance with
regulatory requirements is assured through periodic, unannounced facility inspections by the FDA and
other regulatory authorities, and these inspections may include the manufacturing facilities of AbbVie’s
subcontractors or other third-party manufacturers. Failure to comply with applicable regulatory
requirements can result in enforcement action by the FDA, which may include any of the following
sanctions: warning letters or untitled letters; fines, injunctions and civil penalties; recall or seizure of
AbbVie’ products; operating restrictions, partial suspension or total shutdown of production; refusing
AbbVie’ request for 510(k) clearance or PMA approval of new products; withdrawing 510(k) clearance
or PMA approvals that are already granted; and criminal prosecution.
A clinical trial is almost always required to support a PMA application and is sometimes required
for a 510(k) premarket notification. Clinical trials generally require submission of an application for an
investigational device exemption (IDE), which must be supported by appropriate data, such as animal
and laboratory testing results, showing that it is safe to test the device in humans and that the testing
protocol is scientifically sound. A study sponsor must obtain approval for its IDE from the FDA, and it
must also obtain approval of its study from the Institutional Review Board overseeing the trial. The results
of clinical testing may not be sufficient to obtain approval of the investigational device.
Once a device is approved, the manufacture and distribution of the device remains subject to
continuing regulation by the FDA, including Quality System Regulation requirements, which involve
design, testing, control, documentation and other quality assurance procedures during the manufacturing
process. Medical device manufacturers and their subcontractors are required to register their
establishments and list their manufactured devices with the FDA and are subject to periodic
unannounced inspections by the FDA and certain state agencies for compliance with regulatory
requirements. Manufacturers must also report to the FDA if their devices may have caused or contributed
to a death or serious injury or malfunctioned in a way that could likely cause or contribute to a death
or serious injury, or if the manufacturer conducts a field correction or product recall or removal to reduce
a risk to health posed by a device or to remedy a violation of the FFDCA that may present a health
risk. Further, the FDA continues to regulate device labeling, and prohibits the promotion of products for
unapproved or “off-label” uses along with other labeling restrictions.
European Union. Medical device products that are marketed in the European Union must comply
with the requirements of the Medical Device Regulation (the MDR), which came into effect in May 2021.
The MDR provides for regulatory oversight with respect to the design, manufacture, clinical trials,
labeling and adverse event reporting for medical devices to ensure that medical devices marketed in
the European Union are safe and effective for their intended uses. Medical devices that comply with the
MDR are entitled to bear a Conformité Européenne marking evidencing such compliance and may be
marketed in the European Union. Failure to comply with these domestic and international regulatory
requirements could affect AbbVie’s ability to market and sell AbbVie’s products in these countries.
Environmental Matters
AbbVie believes that its operations comply in all material respects with applicable laws and
regulations concerning environmental protection. Regulations under federal and state environmental
laws impose stringent limitations on emissions and discharges to the environment from various
manufacturing operations. AbbVie’s capital expenditures for pollution control in 2021 were approximately
$17 million and operating expenditures were approximately $33 million. In 2022, capital expenditures
for pollution control are estimated to be approximately $14 million and operating expenditures are
estimated to be approximately $34 million.
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| 2021 Form 10-K
Abbott was identified as one of many potentially responsible parties in investigations and/or
remediations at several locations in the United States, including Puerto Rico, under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly known as Superfund. Some of
these locations were transferred to AbbVie in connection with the separation and distribution, and AbbVie
has become a party to these investigations and remediations. Abbott was also engaged in remediation
at several other sites, some of which have been transferred to AbbVie in connection with the separation
and distribution, in cooperation with the Environmental Protection Agency or similar agencies. While it is
not feasible to predict with certainty the final costs related to those investigations and remediation
activities, AbbVie believes that such costs, together with other expenditures to maintain compliance
with applicable laws and regulations concerning environmental protection, should not have a material
adverse effect on the company’s financial position, cash flows, or results of operations.
Employees
AbbVie employed approximately 50,000 employees in over 70 countries as of January 31, 2022.
Outside the United States, some of AbbVie’s employees are represented by unions or works councils.
AbbVie believes that it has good relations with its employees.
Human Capital Management
Attracting, retaining and providing meaningful growth and development opportunities to AbbVie’s
employees is critical to the company’s success in making a remarkable impact on people’s lives around
the world. AbbVie leverages numerous resources to identify and enhance strategic and leadership
capability, foster employee engagement and create a culture where diverse talent is productive and
engaged. AbbVie invests in its employees through competitive compensation, benefits and employee
support programs and offers best-in-class development and leadership opportunities. AbbVie has
developed a deep talent base through ongoing investment in functional and leadership training and by
sourcing world-class external talent, ensuring a sustainable talent pipeline. AbbVie continuously cultivates
and enhances its working culture and embraces equality, diversity and inclusion as fundamental to the
company’s mission.
Attracting and Developing Talent. Attracting and developing high-performing talent is essential
to AbbVie’s continued success. AbbVie implements detailed talent attraction strategies, with an
emphasis on STEM skill sets, a diverse talent base and other critical skillsets, including drug discovery,
clinical development, market access and business development. AbbVie also invests in competitive
compensation and benefits programs. In addition to offering a comprehensive suite of benefits ranging
from medical and dental coverage to retirement, disability and life insurance programs, AbbVie also
provides health promotion programs, mental health awareness campaigns and employee assistance
programs in several countries, financial wellness support, on-site health screenings and immunizations
in several countries and on-site fitness and rehabilitation centers. In addition, the AbbVie Employee
Assistance Fund (a part of the AbbVie Foundation) supports two programs for global employees: the
AbbVie Possibilities Scholarship for children of employees, which is an annual merit-based scholarship
for use at accredited colleges, universities or vocational-technical schools; and the Employee Relief
Program, which is financial assistance to support short term needs of employees when faced with large-
scale disasters (e.g. a hurricane), individual disasters (e.g. a home fire) or financial hardship (e.g. the
death of a spouse). Finally, AbbVie empowers managers and their teams with tools, tips and guidelines
on effectively managing workloads, managing teams from a distance and supporting flexible work
practices.
New AbbVie employees are given a tailored onboarding experience for faster integration and to
support performance. AbbVie’s mentorship program allows employees to self-nominate as mentors or
mentees and facilitates meaningful relationships supporting employees’ career and development goals.
AbbVie also provides structured, broad-based development opportunities, focusing on high-
performance skills and leadership training. AbbVie’s talent philosophy holds leaders accountable for
building a high-performing organization, and the company provides development opportunities to all
levels of leadership. AbbVie’s Learn, Develop, Perform program offers year-long, self-directed leadership
education, supplemented with tools and resources, and leverages leaders as role models and teachers.
2021 Form 10-K |
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In addition, the foundation to AbbVie’s leadership pipeline is the company’s Professional Development
Programs, which attract graduates, postgraduates and post-doctoral talent to participate in formal
development programs lasting up to three years, with the objective of strengthening functional and
leadership capabilities.
Culture. AbbVie’s shared values of transforming lives, acting with integrity, driving innovation,
embracing diversity and inclusion and serving the community form the core of the company’s culture.
AbbVie articulates the behaviors associated with these values in the Ways We Work, a core set of
working behaviors that emphasize how the company achieves results is equally as important as achieving
them. The Ways We Work are designed to ensure that every AbbVie employee is aware of the
company’s cultural expectations. AbbVie integrates the Ways We Work into all talent processes,
forming the basis for assessing performance, prioritizing development and ultimately rewarding
employees. AbbVie believes its culture creates strong engagement, which is measured regularly through
a confidential, third party all-employee survey, and this engagement supports AbbVie’s mission of
making a remarkable impact on people’s lives.
Equity, Equality, Diversity & Inclusion (EED&I). A cornerstone of AbbVie’s human capital
management approach is to prioritize fostering an inclusive and diverse workforce. In 2019, AbbVie
adopted a five-year Equality, Diversity & Inclusion roadmap that defines key global focus areas, objectives
and associated initiatives, and includes implementation plans organized by business function and
geography. AbbVie’s senior leaders have adopted formal goals aligned with executing this strategy. In
recent years, AbbVie’s board of directors has prioritized oversight of AbbVie’s response to the U.S. racial
justice movement, including overseeing internal programs designed to ensure that AbbVie is attracting,
retaining and developing diverse talent. Through December 2021, women represented 51 percent of
management positions globally and in the United States, 35 percent of AbbVie’s workforce was comprised
of members of historically underrepresented populations, an increase from 2020. Further, AbbVie is
committed to pay equity and conducts pay equity analyses annually. A critical component of AbbVie’s
strategy is to instill an inclusive mindset in all AbbVie leaders and employees, so the company can realize
the full value of a diverse workforce from recruitment through retirement. AbbVie recently launched a
new resource for people who manage others to reinforce the importance of EED&I to the business,
educate leaders on inclusive recruiting practices and modeling inclusive behavior, and encourage
participation in the company’s inclusive culture learning opportunities. AbbVie’s Employee Resource
Groups also help the company nurture an inclusive culture by building community, hosting awareness
events and providing leadership and career opportunities. In 2021, AbbVie reiterated its commitment to
racial equality and social justice by, among other things, expanding its employee matching program to
$3-to-$1 for donations to civil rights nonprofits fostering racial equity and by reaffirming its commitment to
clinical trial diversity. Additional information about AbbVie’s efforts on racial equality and social justice
is provided on the company’s website at: https://abbvie.com/our-company/equality-inclusion-diversity/our-
commitment-to-racial-justice.html.
COVID-19 Health and Safety. AbbVie has effectively prioritized the health and safety of its
employees during the COVID-19 pandemic, while continuing to drive strong business performance.
AbbVie implemented, among other things, temporary office and facility closures and establishment of
new safety and cleaning protocols and procedures; regular communication regarding the effect of the
pandemic on AbbVie’s business and employees; establishment of physical distancing procedures,
modification of workspaces and provision of personal protective equipment and cleaning supplies for
employees; provision of on-site vaccinations and temperature screenings; a variety of testing and
vaccination resources including on-site vaccinations and on-site and at-home testing and COVID case
management programs; and remote working accommodations and related services to support
employees’ needs for flexibility. In addition, COVID-19 is a covered event under the AbbVie Employee
Assistance Fund’s Employee Relief Program, entitling eligible AbbVie employees and their families to
financial assistance to pay for mortgage/rent, utilities, food, childcare and medical expenses not covered
by insurance. AbbVie also provided paid leave and other support and accommodations to the
company’s employees with relevant medical, pharmaceutical, research and development, science,
public health and public safety skills, knowledge, training and experience who desired or were requested
or mandated to serve as volunteers during the pandemic. Lastly, AbbVie’s commitment to employees
has been evidenced by no workforce reductions and no salary reductions associated with COVID-19.
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| 2021 Form 10-K
Internet Information
Copies of AbbVie’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 are available free of charge through AbbVie’s investor
relations website (investors.abbvie.com) as soon as reasonably practicable after AbbVie electronically
files the material with, or furnishes it to, the Securities and Exchange Commission (SEC).
AbbVie’s corporate governance guidelines, outline of directorship qualifications, code of business
conduct and the charters of AbbVie’s audit committee, compensation committee, nominations and
governance committee and public policy committee are all available on AbbVie’s investor relations
website (investors.abbvie.com).
2021 Form 10-K |
17
ITEM 1A. RISK FACTORS
...................................................................................................................................................................................................................................
You should carefully consider the following risks and other information in this Form 10-K in
evaluating AbbVie and AbbVie’s common stock. Any of the following risks could materially and
adversely affect AbbVie’s results of operations, financial condition or cash flows. The risk factors
generally have been separated into two groups: risks related to AbbVie’s business and risks related to
AbbVie’s common stock. Based on the information currently known to it, AbbVie believes that the following
information identifies the most significant risk factors affecting it in each of these categories of risks.
However, the risks and uncertainties AbbVie faces are not limited to those set forth in the risk factors
described below and may not be in order of importance or probability of occurrence. Additional risks and
uncertainties not presently known to AbbVie or that AbbVie currently believes to be immaterial may
also adversely affect its business. In addition, past financial performance may not be a reliable indicator
of future performance and historical trends should not be used to anticipate results or trends in future
periods.
If any of the following risks and uncertainties develops into actual events, these events could have
a material adverse effect on AbbVie’s business, results of operations, financial condition or cash flows.
In such case, the trading price of AbbVie’s common stock could decline.
Risks Related to AbbVie’s Business
Public health outbreaks, epidemics or pandemics, such as the coronavirus (COVID-19), have
had, and could in the future have, an adverse impact on AbbVie’s operations and financial
condition.
Public health outbreaks, epidemics or pandemics have had, and could in the future have, an
adverse impact on AbbVie’s operations and financial condition. The continuing pandemic caused by
the novel strain of coronavirus (COVID-19) has caused many countries, including the United States, to
declare national emergencies and implement preventive measures such as travel bans and shelter in
place or total lock-down orders, some of which have eased. The continuation or re-implementation of
these bans and orders remains uncertain. The COVID-19 pandemic has caused AbbVie to modify its
business practices (including instituting remote work for many of AbbVie’s employees), and AbbVie
may take further actions as may be required by government authorities or as AbbVie determines are in
the best interests of AbbVie’s employees, patients, customers and business partners.
While the impact of COVID-19 on AbbVie’s operations, including, among others, its manufacturing
and supply chain, sales and marketing, commercial and clinical trial operations, to date has not been
material, AbbVie has experienced lower new patient starts in certain products and markets. The impact
of COVID-19 on AbbVie over the long-term is uncertain and cannot be predicted with confidence. The
extent of the adverse impact of COVID-19 on AbbVie’s operations will depend on the extent and severity
of the continued spread of COVID-19 globally, the timing and nature of actions taken to respond to
COVID-19 and the resulting economic consequences. Ultimately, efforts to mitigate the impact of
COVID-19 may not completely prevent AbbVie’s business from being adversely affected and future
impacts remain uncertain.
The expiration or loss of patent protection and licenses may adversely affect AbbVie’s
future revenues and operating earnings.
AbbVie relies on patent, trademark and other intellectual property protection in the discovery,
development, manufacturing and sale of its products. In particular, patent protection is, in the aggregate,
important in AbbVie’s marketing of pharmaceutical products in the United States and most major
markets outside of the United States. Patents covering AbbVie products normally provide market
exclusivity, which is important for the profitability of many of AbbVie’s products.
As patents for certain of its products expire, AbbVie will or could face competition from lower
priced generic or biosimilar products. The expiration or loss of patent protection for a product typically
is followed promptly by substitutes that may significantly reduce sales for that product in a short amount
of time. If AbbVie’s competitive position is compromised because of generics, biosimilars or otherwise,
it could have a material adverse effect on AbbVie’s business and results of operations. In addition,
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| 2021 Form 10-K
proposals emerge from time to time for legislation to further encourage the early and rapid approval of
generic drugs or biosimilars. Any such proposals that are enacted into law could increase the impact of
generic competition.
AbbVie’s principal patents and trademarks are described in greater detail in Item 1, “Business—
Intellectual Property Protection and Regulatory Exclusivity” and Item 7, “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Results of Operations,” and litigation
regarding these patents is described in Item 3, “Legal Proceedings.” The United States composition of
matter patent for Humira, which is AbbVie’s largest product and had worldwide net revenues of
approximately $20.7 billion in 2021, expired in December 2016, and the equivalent European Union
patent expired in the majority of European Union countries in October 2018.
AbbVie’s major products could lose patent protection earlier than expected, which could
adversely affect AbbVie’s future revenues and operating earnings.
Third parties or government authorities may challenge or seek to invalidate or circumvent AbbVie’s
patents and patent applications. For example, manufacturers of generic pharmaceutical products file,
and may continue to file, Abbreviated New Drug Applications with the FDA seeking to market generic
forms of AbbVie’s products prior to the expiration of relevant patents owned or licensed by AbbVie by
asserting that the patents are invalid, unenforceable and/or not infringed. In addition, petitioners have
filed, and may continue to file, challenges to the validity of AbbVie patents under the 2011 Leahy-Smith
America Invents Act, which created inter partes review and post grant review procedures for challenging
patent validity in administrative proceedings at the United States Patent and Trademark Office.
Although most of the challenges to AbbVie’s intellectual property have come from other businesses,
governments may also challenge intellectual property rights. For example, court decisions and potential
legislation relating to patents, such as legislation regarding biosimilars, and other regulatory initiatives
may result in further erosion of intellectual property protection. In addition, certain governments outside
the United States have indicated that compulsory licenses to patents may be sought to further their
domestic policies or on the basis of national emergencies, such as HIV/AIDS. If triggered, compulsory
licenses could diminish or eliminate sales and profits from those jurisdictions and negatively affect
AbbVie’s results of operations.
AbbVie normally responds to challenges by vigorously defending its patents, including by filing
patent infringement lawsuits. Patent litigation, administrative proceedings and other challenges to
AbbVie’s patents are costly and unpredictable and may deprive AbbVie of market exclusivity for a
patented product. To the extent AbbVie’s intellectual property is successfully challenged, circumvented
or weakened, or to the extent such intellectual property does not allow AbbVie to compete effectively,
AbbVie’s business will suffer. To the extent that countries do not enforce AbbVie’s intellectual property
rights or require compulsory licensing of AbbVie’s intellectual property, AbbVie’s future revenues and
operating earnings will be reduced.
A third party’s intellectual property may prevent AbbVie from selling its products or have a
material adverse effect on AbbVie’s future profitability and financial condition.
Third parties may claim that an AbbVie product infringes upon their intellectual property. Resolving
an intellectual property infringement claim can be costly and time consuming and may require AbbVie
to enter into license agreements. AbbVie cannot guarantee that it would be able to obtain license
agreements on commercially reasonable terms. A successful claim of patent or other intellectual
property infringement could subject AbbVie to significant damages or an injunction preventing the
manufacture, sale, or use of the affected AbbVie product or products. Any of these events could have a
material adverse effect on AbbVie’s profitability and financial condition.
Any significant event that adversely affects Humira revenues could have a material and
negative impact on AbbVie’s results of operations and cash flows.
Humira accounted for approximately 37% of AbbVie’s total net revenues in 2021. Any significant
event that adversely affects Humira’s revenues could have a material adverse impact on AbbVie’s
results of operations and cash flows. These events could include loss of patent protection for Humira
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(as described further in “—The expiration or loss of patent protection and licenses may adversely
affect AbbVie’s future revenues and operating earnings” above), the commercialization of biosimilars of
Humira, the discovery of previously unknown side effects or impaired efficacy, increased competition
from the introduction of new, more effective or less expensive treatments and discontinuation or removal
from the market of Humira for any reason.
AbbVie’s research and development efforts may not succeed in developing and marketing
commercially successful products and technologies, which may cause its revenues and
profitability to decline.
To remain competitive, AbbVie must continue to launch new products and new indications and/or
brand extensions for existing products, and such launches must generate revenue sufficient both to
cover its substantial research and development costs and to replace revenues of profitable products that
are lost to or displaced by competing products or therapies. Failure to do so would have a material
adverse effect on AbbVie’s revenue and profitability. Accordingly, AbbVie commits substantial effort,
funds, and other resources to research and development and must make ongoing substantial
expenditures without any assurance that its efforts will be commercially successful. A high rate of
failure in the biopharmaceutical industry is inherent in the research and development of new products,
and failure can occur at any point in the research and development process, including after significant
funds have been invested. Products that appear promising in development may fail to reach the market
for numerous reasons, including failure to demonstrate effectiveness, safety concerns, superior safety or
efficacy of competing therapies, failure to achieve positive clinical or pre-clinical outcomes beyond the
current standards of care, inability to obtain necessary regulatory approvals or delays in the approval of
new products and new indications, limited scope of approved uses, excessive costs to manufacture,
the failure to obtain or maintain intellectual property rights, or infringement of the intellectual property
rights of others.
Decisions about research studies made early in the development process of a pharmaceutical
product candidate can affect the marketing strategy once such candidate receives approval. More
detailed studies may demonstrate additional benefits that can help in the marketing, but they also
consume time and resources and may delay submitting the pharmaceutical product candidate for
approval. AbbVie cannot guarantee that a proper balance of speed and testing will be made with respect
to each pharmaceutical product candidate or that decisions in this area would not adversely affect
AbbVie’s future results of operations.
Even if AbbVie successfully develops and markets new products or enhancements to its existing
products, they may be quickly rendered obsolete by changing clinical preferences, changing industry
standards, or competitors’ innovations. AbbVie’s innovations may not be accepted quickly in the
marketplace because of existing clinical practices or uncertainty over third-party reimbursement. AbbVie
cannot state with certainty when or whether any of its products under development will be launched,
whether it will be able to develop, license, or otherwise acquire compounds or products, or whether any
products will be commercially successful. Failure to launch successful new products or new indications
for existing products may cause AbbVie’s products to become obsolete, causing AbbVie’s revenues and
operating results to suffer.
A portion of AbbVie’s near-term pharmaceutical pipeline relies on collaborations with third
parties, which may adversely affect the development and sale of its products.
AbbVie depends on alliances and joint ventures with pharmaceutical and biotechnology companies
for a portion of the products in its near-term pharmaceutical pipeline. Failures by these parties to meet
their contractual, regulatory, or other obligations to AbbVie, or any disruption in the relationships between
AbbVie and these third parties, could have an adverse effect on AbbVie’s pharmaceutical pipeline and
business. In addition, AbbVie’s collaborative relationships for research and development extend for
many years and may give rise to disputes regarding the relative rights, obligations and revenues of
AbbVie and its collaboration partners, including the ownership of intellectual property and associated
rights and obligations. This could result in the loss of intellectual property rights or protection, delay the
development and sale of potential pharmaceutical products and lead to lengthy and expensive litigation,
administrative proceedings or arbitration.
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Biologics carry unique risks and uncertainties, which could have a negative impact on
future results of operations.
The successful discovery, development, manufacturing and sale of biologics is a long, expensive
and uncertain process. There are unique risks and uncertainties with biologics. For example, access to
and supply of necessary biological materials, such as cell lines, may be limited and governmental
regulations restrict access to and regulate the transport and use of such materials. In addition, the
development, manufacturing and sale of biologics is subject to regulations that are often more complex
and extensive than the regulations applicable to other pharmaceutical products. Manufacturing biologics,
especially in large quantities, is often complex and may require the use of innovative technologies. Such
manufacturing also requires facilities specifically designed and validated for this purpose and
sophisticated quality assurance and quality control procedures. Biologics are also frequently costly to
manufacture because production inputs are derived from living animal or plant material, and some
biologics cannot be made synthetically. Failure to successfully discover, develop, manufacture and sell
biologics—including Humira—could adversely impact AbbVie’s business and results of operations.
AbbVie’s biologic products are subject to competition from biosimilars.
The Biologics Price Competition and Innovation Act creates a framework for the approval of
biosimilars in the United States and could allow competitors to reference data from biologic products
already approved. In Europe, the European Commission has granted marketing authorizations for several
biosimilars pursuant to a set of general and product class-specific guidelines for biosimilar approvals
issued over the past few years. In addition, companies are developing biosimilars in other countries that
could and do compete with AbbVie’s biologic products, including Humira. As competitors obtain
marketing approval for biosimilars referencing AbbVie’s biologic products, AbbVie’s products may
become subject to competition from such biosimilars, with the attendant competitive pressure and
consequences. Expiration or successful challenge of AbbVie’s applicable patent rights could also trigger
competition from other products, assuming any relevant exclusivity period has expired. As a result,
AbbVie could face more litigation and administrative proceedings with respect to the validity and/or scope
of patents relating to its biologic products.
New products and technological advances by AbbVie’s competitors may negatively affect
AbbVie’s results of operations.
AbbVie competes with other research-based pharmaceutical and biotechnology companies that
discover, manufacture, market and sell proprietary pharmaceutical products and biologics. For example,
Humira competes with anti-TNF products and other competitive products intended to treat a number
of disease states and Mavyret/Maviret competes with other available hepatitis C treatment options. In
addition, in the past few years, a number of other companies have started to develop, have successfully
developed and/or are currently marketing products that are being positioned as competitors to Botox.
All of these competitors may introduce new products or develop technological advances that compete
with AbbVie’s products in therapeutic areas such as immunology, hematologic oncology, aesthetics,
neuroscience, eye care and women’s health. AbbVie cannot predict with certainty the timing or impact
of the introduction by competitors of new products or technological advances. Such competing products
may be safer, more effective, more effectively marketed or sold, or have lower prices or superior
performance features than AbbVie’s products, and this could negatively impact AbbVie’s business and
results of operations.
The manufacture of many of AbbVie’s products is a highly exacting and complex process,
and if AbbVie or one of its suppliers encounters problems manufacturing AbbVie’s products,
AbbVie’s business could suffer.
The manufacture of many of AbbVie’s products is a highly exacting and complex process, due in
part to strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons,
including equipment malfunction, failure to follow specific protocols and procedures, problems with
raw materials, delays related to the construction of new facilities or the expansion of existing facilities,
including those intended to support future demand for AbbVie’s products, changes in manufacturing
production sites and limits to manufacturing capacity due to regulatory requirements, changes in the
2021 Form 10-K |
21
types of products produced, physical limitations that could inhibit continuous supply, man-made or
natural disasters and environmental factors. If problems arise during the production of a batch of
product, that batch of product may have to be discarded and AbbVie may experience product shortages
or incur added expenses. This could, among other things, lead to increased costs, lost revenue,
damage to customer relations, time and expense spent investigating the cause and, depending on the
cause, similar losses with respect to other batches or products. If problems are not discovered before the
product is released to the market, recall and product liability costs may also be incurred.
AbbVie uses a number of products in its pharmaceutical and biologic manufacturing
processes that are sourced from single suppliers, and an interruption in the supply of those
products could adversely affect AbbVie’s business and results of operations.
AbbVie uses a number of products in its pharmaceutical and biologic manufacturing processes
that are sourced from single suppliers. The failure of these single-source suppliers to fulfill their
contractual obligations in a timely manner or as a result of regulatory noncompliance or physical
disruption at a manufacturing site may impair AbbVie’s ability to deliver its products to customers on a
timely and competitive basis, which could adversely affect AbbVie’s business and results of operations.
Finding an alternative supplier could take a significant amount of time and involve significant expense
due to the nature of the products and the need to obtain regulatory approvals. AbbVie cannot guarantee
that it will be able to reach agreement with alternative providers or that regulatory authorities would
approve AbbVie’s use of such alternatives. AbbVie does, however, carry business interruption insurance,
which provides a degree of protection in the case of a failure by a single-source supplier.
Certain aspects of AbbVie’s operations are highly dependent upon third party service
providers.
AbbVie relies on suppliers, vendors and other third party service providers to research, develop,
manufacture, commercialize, promote and sell its products. Reliance on third party manufacturers
reduces AbbVie’s oversight and control of the manufacturing process. Some of these third party
providers are subject to legal and regulatory requirements, privacy and security risks and market risks
of their own. The failure of a critical third party service provider to meet its obligations could have a
material adverse impact on AbbVie’s operations and results. If any third party service providers have
violated or are alleged to have violated any laws or regulations during the performance of their obligations
to AbbVie, it is possible that AbbVie could suffer financial and reputational harm or other negative
outcomes, including possible legal consequences.
Significant safety or efficacy issues could arise for AbbVie’s products, which could have a
material adverse effect on AbbVie’s revenues and financial condition.
Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical
trials of limited duration. Following regulatory approval, these products will be used over longer periods
of time in many patients. Investigators may also conduct additional, and perhaps more extensive,
studies. If new safety or efficacy issues are reported or if new scientific information becomes available
(including results of post-marketing Phase 4 trials), or if governments change standards regarding
safety, efficacy or labeling, AbbVie may be required to amend the conditions of use for a product. For
example, AbbVie may voluntarily provide or be required to provide updated information on a product’s
label or narrow its approved indication, either of which could reduce the product’s market acceptance. If
safety or efficacy issues with an AbbVie product arise, sales of the product could be halted by AbbVie
or by regulatory authorities and regulatory action could be taken by such regulatory authorities. Safety or
efficacy issues affecting suppliers’ or competitors’ products also may reduce the market acceptance of
AbbVie’s products.
New data about AbbVie’s products, or products similar to its products, could negatively impact
demand for AbbVie’s products due to real or perceived safety issues or uncertainty regarding efficacy
and, in some cases, could result in product withdrawal. Furthermore, new data and information, including
information about product misuse, may lead government agencies, professional societies, practice
management groups or organizations involved with various diseases to publish guidelines or
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| 2021 Form 10-K
recommendations related to the use of AbbVie’s products or the use of related therapies or place
restrictions on sales. Such guidelines or recommendations may lead to lower sales of AbbVie’s products.
AbbVie is subject to product liability claims and other lawsuits that may adversely affect its
business and results of operations.
In the ordinary course of business, AbbVie is the subject of product liability claims and lawsuits
alleging that AbbVie’s products or the products of other companies that it promotes have resulted or
could result in an unsafe condition for or injury to patients. For example, lawsuits are pending against
Allergan, AbbVie’s recently acquired subsidiary, and certain of its current and former officers alleging
they made misrepresentations and omissions regarding Allergan’s textured breast implants. Product
liability claims and lawsuits and safety alerts or product recalls, regardless of their ultimate outcome, may
have a material adverse effect on AbbVie’s business, results of operations and reputation and on its
ability to attract and retain customers. Consequences may also include additional costs, a decrease in
market share for the product in question, lower income and exposure to other claims. Product liability
losses are self-insured.
AbbVie is also the subject of other claims, legal proceedings and investigations in the ordinary
course of business, which relate to the intellectual property, commercial, securities and other matters.
Adverse outcomes in such claims, legal proceedings and investigations may also adversely affect
AbbVie’s business and results of operations. Additionally, Allergan has been named as a defendant in
approximately 3,130 matters relating to the promotion and sale of prescription opioid pain relievers and
additional suits may be filed. See Note 15, “Legal Proceedings and Contingencies” to the Consolidated
Financial Statements included under Item 8, “Financial Statements and Supplementary Data.” AbbVie
cannot predict the outcome of these proceedings.
AbbVie is subject to cost-containment efforts and pricing pressures that could cause a
reduction in future revenues and operating earnings, and changes in the terms of rebate
and chargeback programs, which are common in the pharmaceuticals industry, could have
a material adverse effect on AbbVie’s operations.
Cost-containment efforts by governments and private organizations are described in greater detail
in Item 1, “Business—Regulation—Commercialization, Distribution and Manufacturing.” To the extent
these cost containment efforts are not offset by greater demand, increased patient access to health care,
or other factors, AbbVie’s future revenues and operating earnings will be reduced. In the United States,
the European Union and other countries, AbbVie’s business has experienced downward pressure on
product pricing, and this pressure could increase in the future.
AbbVie is subject to increasing public and legislative pressure with respect to pharmaceutical
pricing. In the United States, practices of managed care groups, and institutional and governmental
purchasers, and United States federal laws and regulations related to Medicare and Medicaid, including
the Medicare Prescription Drug Improvement and Modernization Act of 2003 and the Patient Protection
and Affordable Care Act, contribute to pricing pressures. The potential for continuing changes to the
health care system in the United States and the increased purchasing power of entities that negotiate
on behalf of Medicare, Medicaid and private sector beneficiaries could result in additional pricing
pressures.
In numerous major markets worldwide, the government plays a significant role in funding health
care services and determining the pricing and reimbursement of pharmaceutical products. Consequently,
in those markets, AbbVie is subject to government decision-making and budgetary actions with
respect to its products. In particular, many European countries have ongoing government-mandated
price reductions for many pharmaceutical products, and AbbVie anticipates continuing pricing pressures
in Europe. Differences between countries in pricing regulations could lead to third-party cross-border
trading in AbbVie’s products that results in a reduction in future revenues and operating earnings.
Rebates related to government programs, such as fee-for-service Medicaid or Medicaid managed
care programs, arise from laws and regulations. AbbVie cannot predict if additional government initiatives
to contain health care costs or other factors could lead to new or modified regulatory requirements
that include higher or incremental rebates or discounts. Other rebate and discount programs arise from
2021 Form 10-K |
23
contractual agreements with private payers. Various factors, including market factors and the ability of
private payers to control patient access to products, may provide payers the leverage to negotiate higher
or additional rebates or discounts that could have a material adverse effect on AbbVie’s operations.
AbbVie is subject to numerous governmental regulations, and it can be costly to comply
with these regulations and to develop compliant products and processes.
AbbVie’s products are subject to rigorous regulation by numerous international, supranational,
federal and state authorities, as described in Item 1, “Business—Regulation—Discovery and Clinical
Development,” “Business—Regulation—Commercialization, Distribution and Manufacturing,” and
“Business—Regulation—Medical Devices.” The process of obtaining regulatory approvals to market a
pharmaceutical product can be costly and time consuming, and approvals might not be granted for future
products, or additional indications or uses of existing products, on a timely basis, if at all. Delays in
the receipt of, or failure to obtain approvals for, future products, or new indications and uses, could result
in delayed realization of product revenues, reduction in revenues and substantial additional costs.
In addition, AbbVie cannot guarantee that it will remain compliant with applicable regulatory
requirements once approval has been obtained for a product. These requirements include, among
other things, regulations regarding manufacturing practices, product labeling and advertising and
post-marketing reporting, including adverse event reports and field alerts due to manufacturing quality
concerns. AbbVie must incur expense and spend time and effort to ensure compliance with these complex
regulations.
Possible regulatory actions could result in substantial modifications to AbbVie’s business practices
and operations; refunds, recalls or seizures of AbbVie’s products; a total or partial shutdown of production
in one or more of AbbVie’s or its suppliers’ facilities while AbbVie or its supplier remedies the alleged
violation; the inability to obtain future approvals; and withdrawals or suspensions of current products from
the market. Any of these events could disrupt AbbVie’s business and have a material adverse effect
on its business and results of operations.
Laws and regulations affecting government benefit programs could impose new obligations
on AbbVie, require it to change its business practices, and restrict its operations in the
future.
The health care industry is subject to various federal, state and international laws and regulations
pertaining to government benefit programs reimbursement, rebates, price reporting and regulation and
health care fraud and abuse. In the United States, these laws include anti-kickback and false claims
laws, the Medicaid Rebate Statute, the Veterans Health Care Act, the U.S. Physician Payments Sunshine
Act, the TRICARE program, the government pricing rules applicable to the Medicaid, Medicare Part B,
340B Drug Pricing Program and individual state laws relating to pricing and sales and marketing practices.
Violations of these laws may be punishable by criminal and/or civil sanctions, including, in some
instances, substantial fines, imprisonment and exclusion from participation in federal and state health
care programs, including Medicare, Medicaid and Veterans Administration health programs. These laws
and regulations are broad in scope and they are subject to change and evolving interpretations, which
could require AbbVie to incur substantial costs associated with compliance or to alter one or more of its
sales or marketing practices. In addition, violations of these laws, or allegations of such violations,
could disrupt AbbVie’s business and result in a material adverse effect on its business and results of
operations.
The international nature of AbbVie’s business subjects it to additional business risks that
may cause its revenue and profitability to decline.
AbbVie’s business is subject to risks associated with doing business internationally, including in
emerging markets. Net revenues outside of the United States made up approximately 23% of AbbVie’s
total net revenues in 2021. The risks associated with AbbVie’s operations outside the United States
include:
• fluctuations in currency exchange rates;
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| 2021 Form 10-K
• changes in medical reimbursement policies and programs;
• multiple legal and regulatory requirements that are subject to change and that could restrict
AbbVie’s ability to manufacture, market and sell its products;
• differing local product preferences and product requirements;
• trade protection measures and import or export licensing requirements;
• international trade disruptions or disputes;
• difficulty in establishing, staffing and managing operations;
• differing labor regulations;
• potentially negative consequences from changes in or interpretations of tax laws;
• political and economic instability, including as a result of the United Kingdom’s exit from the
European Union and the COVID-19 pandemic;
• sovereign debt issues;
• price and currency exchange controls, limitations on participation in local enterprises,
expropriation, nationalization and other governmental action and regulation;
• inflation, recession and fluctuations in interest rates;
• restrictions on transfers of funds;
• potential deterioration in the economic position and credit quality of certain non-U.S. countries;
and
• potential penalties or other adverse consequences for violations of anti-corruption, anti-bribery
and other similar laws and regulations, including the United States Foreign Corrupt Practices Act
and the United Kingdom Bribery Act.
Events contemplated by these risks may, individually or in the aggregate, have a material adverse
effect on AbbVie’s revenues and profitability.
If AbbVie does not effectively and profitably commercialize its products, AbbVie’s revenues
and financial condition could be adversely affected.
AbbVie must effectively and profitably commercialize its principal products by creating and meeting
continued market demand; achieving market acceptance and generating product sales; ensuring that
the active pharmaceutical ingredient(s) for a product and the finished product are manufactured in
sufficient quantities and in compliance with requirements of the FDA and similar foreign regulatory
agencies and with acceptable quality and pricing to meet commercial demand; and ensuring that the
entire supply chain efficiently and consistently delivers AbbVie’s products to its customers. The
commercialization of AbbVie products may not be successful due to, among other things, unexpected
challenges from competitors, new safety issues or concerns being reported that may impact or narrow
approved indications, the relative price of AbbVie’s product as compared to alternative treatment
options and changes to a product’s label that further restrict its marketing. If the commercialization of
AbbVie’s principal products is unsuccessful, AbbVie’s ability to generate revenue from product sales will
be adversely affected.
AbbVie may acquire other businesses, license rights to technologies or products, form
alliances, or dispose of assets, which could cause it to incur significant expenses and could
negatively affect profitability.
AbbVie may pursue acquisitions, technology licensing arrangements, joint ventures and strategic
alliances, or dispose of some of its assets, as part of its business strategy. AbbVie may not complete
these transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected
benefits. If AbbVie is successful in making an acquisition, the products and technologies that are
acquired may not be successful or may require significantly greater resources and investments than
2021 Form 10-K |
25
originally anticipated. AbbVie may not be able to integrate acquisitions successfully into its existing
business and could incur or assume significant debt and unknown or contingent liabilities. AbbVie
could also experience negative effects on its reported results of operations from acquisition or
disposition-related charges, amortization of expenses related to intangibles and charges for impairment
of long-term assets. These effects could cause a deterioration of AbbVie’s credit rating and result in
increased borrowing costs and interest expense.
Additionally, changes in AbbVie’s structure, operations, revenues, costs, or efficiency resulting from
major transactions such as acquisitions, divestitures, mergers, alliances, joint ventures, restructurings
or other strategic initiatives, may result in greater than expected costs, may take longer than expected to
complete or encounter other difficulties, including the need for regulatory approval where appropriate.
AbbVie is dependent on wholesale distributors for distribution of its products in the
United States and, accordingly, its results of operations could be adversely affected if they
encounter financial difficulties.
In 2021, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and
AmerisourceBergen Corporation) accounted for substantially all of AbbVie’s pharmaceutical product
sales in the United States. If one of its significant wholesale distributors encounters financial or other
difficulties, such distributor may decrease the amount of business that it does with AbbVie, and AbbVie
may be unable to collect all the amounts that the distributor owes it on a timely basis or at all, which
could negatively impact AbbVie’s business and results of operations.
AbbVie has debt obligations that could adversely affect its business and its ability to meet
its obligations.
The amount of debt that AbbVie has incurred and intends to incur could have important
consequences to AbbVie and its investors. These consequences include, among other things, requiring
a portion of AbbVie’s cash flow from operations to make interest payments on this debt and reducing
the cash flow available to fund capital expenditures and other corporate purposes and to grow AbbVie’s
business. In particular, AbbVie incurred significant debt in connection with its acquisition of Allergan.
AbbVie’s substantially increased indebtedness and higher debt to equity ratio as a result of the acquisition
may exacerbate these risks and have the effect of, among other things, reducing its flexibility to respond
to changing business and economic conditions and/or lowering its credit ratings. To the extent AbbVie
incurs additional indebtedness or interest rates increase, these risks could increase further. In addition,
AbbVie’s cash flow from operations may not be sufficient to repay all of the outstanding debt as it
becomes due, and AbbVie may not be able to borrow money, sell assets, or otherwise raise funds on
acceptable terms, or at all, to refinance its debt.
AbbVie may need additional financing in the future to meet its capital needs or to make
opportunistic acquisitions, and such financing may not be available on favorable terms,
if at all.
AbbVie may need to seek additional financing for its general corporate purposes. For example, it
may need to increase its investment in research and development activities or need funds to make
acquisitions. AbbVie may be unable to obtain any desired additional financing on terms favorable to it,
if at all. If AbbVie loses its investment grade credit rating or adequate funds are not available on
acceptable terms, AbbVie may be unable to fund its expansion, successfully develop or enhance
products, or respond to competitive pressures, any of which could negatively affect AbbVie’s business.
If AbbVie raises additional funds by issuing debt or entering into credit facilities, it may be subject to
limitations on its operations due to restrictive covenants. Failure to comply with these covenants could
adversely affect AbbVie’s business.
AbbVie depends on information technology and a failure of those systems could have a
material adverse effect on AbbVie’s business.
AbbVie relies on sophisticated software applications and complex information technology systems
to operate its business. These systems are potentially vulnerable to malicious intrusion, random attack,
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| 2021 Form 10-K
loss of data privacy, disruption, degradation or breakdown. Data privacy or security breaches by
employees or others may in the future result in the failure of critical business operations. Such breaches
may cause sensitive data, including intellectual property, trade secrets or personal information
belonging to AbbVie, its patients, customers or business partners, to be exposed to unauthorized
persons or to the public. To date, AbbVie’s business or operations have not been materially impacted
by such incidents. Although AbbVie has invested in the protection of its data and information technology
and also monitors its systems on an ongoing basis, there can be no assurance that these efforts will
prevent material breakdowns or breaches in AbbVie’s information technology systems that could
adversely affect AbbVie’s business. Such adverse consequences could include loss of revenue, or the
loss of critical or sensitive information from AbbVie’s or third-party providers’ databases or IT systems
and could also result in legal, financial, reputational or business harm to AbbVie and potentially
substantial remediation costs.
In connection with the acquisition of Allergan, AbbVie’s balances of intangible assets,
including developed product rights and goodwill acquired, have increased significantly. Such
balances are subject to impairment testing and may result in impairment charges, which
will adversely affect AbbVie’s results of operations and financial condition.
A significant amount of AbbVie’s total assets is related to acquired intangibles and goodwill. As of
December 31, 2021, the carrying value of AbbVie’s developed product rights and other intangible assets
was $76.0 billion and the carrying value of AbbVie’s goodwill was $32.4 billion.
AbbVie’s developed product rights are stated at cost, less accumulated amortization. AbbVie
determines original fair value and amortization periods for developed product rights based on its
assessment of various factors impacting estimated useful lives and cash flows of the acquired products.
Significant adverse changes to any of these factors require AbbVie to perform an impairment test on
the affected asset and, if evidence of impairment exists, require AbbVie to take an impairment charge
with respect to the asset. For assets that are not impaired, AbbVie may adjust the remaining useful lives.
Such a charge could have a material adverse effect on AbbVie’s results of operations and financial
condition.
AbbVie’s other significant intangible assets include in-process research and development (IPR&D)
intangible projects, acquired in recent business combinations, which are indefinite-lived intangible assets.
Goodwill and AbbVie’s IPR&D intangible assets are tested for impairment annually, or when events
occur or circumstances change that could potentially reduce the fair value of the reporting unit or
intangible asset. Impairment testing compares the fair value of the reporting unit or intangible asset to
its carrying amount. A goodwill or IPR&D impairment, if any, would be recorded in operating income and
could have a material adverse effect on AbbVie’s results of operations and financial condition.
Failure to attract, develop and retain highly qualified personnel could affect AbbVie’s ability
to successfully develop and commercialize products.
AbbVie’s success is largely dependent on its continued ability to attract, develop and retain diverse,
highly qualified scientific, technical and management personnel, as well as personnel with expertise in
clinical research and development (R&D), governmental regulation and commercialization. Competition
for qualified personnel in the biopharmaceutical field is intense. AbbVie cannot be sure that it will be
able to attract and retain quality personnel or that the costs of doing so will not materially increase.
Other factors can have a material adverse effect on AbbVie’s profitability and financial
condition.
Many other factors can affect AbbVie’s results of operations, cash flows and financial condition,
including:
• changes in or interpretations of laws and regulations, including changes in accounting standards,
taxation requirements, product marketing application standards, data privacy laws, particularly
in the European Union and the United States, and environmental laws;
2021 Form 10-K |
27
• differences between the fair value measurement of assets and liabilities and their actual value,
particularly for pension and post-employment benefits, stock-based compensation, intangibles
and goodwill; and for contingent liabilities such as litigation and contingent consideration, the
absence of a recorded amount, or an amount recorded at the minimum, compared to the actual
amount;
• changes in the rate of inflation (including the cost of raw materials, commodities and supplies),
interest rates, market value of AbbVie’s equity investments and the performance of investments
held by it or its employee benefit trusts;
• changes in the creditworthiness of counterparties that transact business with or provide services
to AbbVie or its employee benefit trusts;
• environmental liabilities in connection with AbbVie’s manufacturing processes and distribution
logistics, including the handling of hazardous materials;
• changes in the ability of third parties that provide information technology, accounting, human
resources, payroll and other outsourced services to AbbVie to meet their contractual obligations
to AbbVie;
• business interruptions stemming from natural disasters, such as climate change, earthquakes,
hurricanes, flooding, fires, or efforts taken by third parties to prevent or mitigate such disasters; and
• changes in business, economic and political conditions, including: war, political instability,
terrorist attacks, the threat of future terrorist activity and related military action; natural disasters;
the cost and availability of insurance due to any of the foregoing events; labor disputes, strikes,
slow-downs, or other forms of labor or union activity; and pressure from third-party interest groups.
Risks Related to AbbVie’s Common Stock
AbbVie cannot guarantee the timing, amount, or payment of dividends on its common
stock.
Although AbbVie expects to pay regular cash dividends, the timing, declaration, amount and
payment of future dividends to stockholders will fall within the discretion of AbbVie’s board of directors.
The board’s decisions regarding the payment of dividends will depend on many factors, such as
AbbVie’s financial condition, earnings, capital requirements, debt service obligations, industry practice,
legal requirements, regulatory constraints and other factors that the board deems relevant. For more
information, see Item 5, “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.” AbbVie’s ability to pay dividends will depend on its ongoing ability to
generate cash from operations and access capital markets. AbbVie cannot guarantee that it will continue
to pay a dividend in the future.
An AbbVie stockholder’s percentage of ownership in AbbVie may be diluted in the future.
In the future, a stockholder’s percentage ownership in AbbVie may be diluted because of equity
issuances for capital market transactions, equity awards that AbbVie will be granting to AbbVie’s
directors, officers and employees, acquisitions or other purposes. AbbVie’s employees have options to
purchase shares of its common stock as a result of conversion of their Abbott stock options (in whole or
in part) to AbbVie stock options. AbbVie anticipates its compensation committee will grant additional
stock options or other stock-based awards to its employees. Such awards will have a dilutive effect on
AbbVie’s earnings per share, which could adversely affect the market price of AbbVie’s common stock.
From time to time, AbbVie will issue additional options or other stock-based awards to its employees
under AbbVie’s employee benefits plans.
In addition, AbbVie’s amended and restated certificate of incorporation authorizes AbbVie to issue,
without the approval of AbbVie’s stockholders, one or more classes or series of preferred stock having
such designation, powers, preferences and relative, participating, optional and other special rights,
including preferences over AbbVie’s common stock respecting dividends and distributions, as AbbVie’s
board of directors generally may determine. The terms of one or more classes or series of preferred
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| 2021 Form 10-K
stock could dilute the voting power or reduce the value of AbbVie’s common stock. For example,
AbbVie could grant the holders of preferred stock the right to elect some number of AbbVie’s directors
in all events or on the happening of specified events or the right to veto specified transactions. Similarly,
the repurchase or redemption rights or liquidation preferences AbbVie could assign to holders of preferred
stock could affect the residual value of the common stock.
Certain provisions in AbbVie’s amended and restated certificate of incorporation and
amended and restated by-laws, and of Delaware law, may prevent or delay an acquisition of
AbbVie, which could decrease the trading price of AbbVie’s common stock.
AbbVie’s amended and restated certificate of incorporation and amended and restated by-laws
contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices
and inadequate takeover bids by encouraging prospective acquirors to negotiate with AbbVie’s board of
directors rather than to attempt a hostile takeover. These provisions include, among others:
• the inability of AbbVie’s stockholders to call a special meeting;
• the division of AbbVie’s board of directors into three classes of directors, with each class
serving a staggered three-year term;
• a provision that stockholders may only remove directors for cause;
• the ability of AbbVie’s directors, and not stockholders, to fill vacancies on AbbVie’s board of
directors; and
• the requirement that the affirmative vote of stockholders holding at least 80% of AbbVie’s voting
stock is required to amend certain provisions in AbbVie’s amended and restated certificate of
incorporation and AbbVie’s amended and restated by-laws relating to the number, term and
election of AbbVie’s directors, the filling of board vacancies, the calling of special meetings of
stockholders and director and officer indemnification provisions.
In addition, Section 203 of the Delaware General Corporation Law provides that, subject to limited
exceptions, persons that acquire, or are affiliated with a person that acquires, more than 15% of the
outstanding voting stock of a Delaware corporation shall not engage in any business combination with
that corporation, including by merger, consolidation or acquisitions of additional shares, for a three-year
period following the date on which that person or its affiliates becomes the holder of more than 15%
of the corporation’s outstanding voting stock.
AbbVie believes these provisions protect its stockholders from coercive or otherwise unfair
takeover tactics by requiring potential acquirors to negotiate with AbbVie’s board of directors and by
providing AbbVie’s board of directors with more time to assess any acquisition proposal. These provisions
are not intended to make the company immune from takeovers. However, these provisions apply even
if the offer may be considered beneficial by some stockholders and could delay or prevent an acquisition
that AbbVie’s board of directors determines is not in the best interests of AbbVie and AbbVie’s
stockholders. These provisions may also prevent or discourage attempts to remove and replace
incumbent directors.
2021 Form 10-K |
29
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K contains certain forward looking statements regarding business
strategies, market potential, future financial performance and other matters. The words “believe,”
“expect,” “anticipate,” “project” and similar expressions, among others, generally identify “forward looking
statements,” which speak only as of the date the statements were made. The matters discussed in
these forward looking statements are subject to risks, uncertainties and other factors that could cause
actual results to differ materially from those projected, anticipated or implied in the forward looking
statements. In particular, information included under Item 1, “Business,” Item 1A, “Risk Factors,” and
Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
contain forward looking statements. Where, in any forward looking statement, an expectation or belief as
to future results or events is expressed, such expectation or belief is based on the current plans and
expectations of AbbVie management and expressed in good faith and believed to have a reasonable
basis, but there can be no assurance that the expectation or belief will result or be achieved or
accomplished. Factors that could cause actual results or events to differ materially from those anticipated
include the matters described under Item 1A, “Risk Factors” and Item 7, “Management’s Discussion
and Analysis of Financial Condition and Results of Operations.” AbbVie does not undertake any obligation
to update the forward-looking statements included in this Annual Report on Form 10-K to reflect
events or circumstances after the date hereof, unless AbbVie is required by applicable securities law to
do so.
ITEM 1B. UNRESOLVED STAFF COMMENTS
...................................................................................................................................................................................................................................
None.
ITEM 2. PROPERTIES
...................................................................................................................................................................................................................................
AbbVie’s corporate offices are located at 1 North Waukegan Road, North Chicago, Illinois
60064-6400. As of December 31, 2021, AbbVie owns or leases approximately 645 facilities worldwide,
containing an aggregate of approximately 20 million square feet of floor space dedicated to production,
distribution, and administration. AbbVie’s significant manufacturing facilities are in the following locations:
United States
Abbott Park, Illinois*
Barceloneta, Puerto Rico
Branchburg, New Jersey*
Campbell, California
Cincinnati, Ohio
Dublin, California*
Irvine, California
North Chicago, Illinois
Waco, Texas
Worcester, Massachusetts*
Wyandotte, Michigan*
*
Leased property.
Outside the United States
Campoverde di Aprilia, Italy
Clonshaugh, Ireland
La Aurora, Costa Rica
Ludwigshafen, Germany
Pringy, France
Singapore*
Sligo, Ireland
Westport, Ireland*
AbbVie believes its facilities are suitable and provide adequate production capacity for its current
and projected operations. There are no material encumbrances on AbbVie’s owned properties.
In the United States, including Puerto Rico, AbbVie has two central distribution centers. AbbVie also
has research and development facilities in the United States located at: Abbott Park, Illinois; Branchburg,
New Jersey; Cambridge, Massachusetts; Irvine, California; Madison, New Jersey; North Chicago,
Illinois; Pleasanton, California; Santa Cruz, California; South San Francisco, California; and Worcester,
30
| 2021 Form 10-K
Massachusetts. Outside the United States, AbbVie’s principal research and development facilities are
located in Ludwigshafen, Germany.
ITEM 3. LEGAL PROCEEDINGS
...................................................................................................................................................................................................................................
Information pertaining to legal proceedings is provided in Note 15, “Legal Proceedings and
Contingencies” to the Consolidated Financial Statements included under Item 8, “Financial Statements
and Supplementary Data,” and is incorporated by reference herein.
ITEM 4. MINE SAFETY DISCLOSURES
...................................................................................................................................................................................................................................
Not applicable.
2021 Form 10-K |
31
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table lists AbbVie’s executive officers:
Name
Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Michael E. Severino, M.D.
Henry O. Gosebruch
Timothy J. Richmond
Azita Saleki-Gerhardt, Ph.D.
Jeffrey R. Stewart
Thomas J. Hudson, M.D.
Elaine K. Sorg
Carrie Strom
Brian L. Durkin
Age
68
51
58
56
49
55
58
53
60
55
44
61
Position
Chairman of the Board and Chief Executive Officer
Vice Chairman, Finance and Commercial Operations and Chief
Financial Officer
Vice Chairman, External Affairs and Chief Legal Officer
Vice Chairman and President
Executive Vice President, Chief Strategy Officer
Executive Vice President, Chief Human Resources Officer
Executive Vice President, Operations
Executive Vice President, Chief Commercial Officer
Senior Vice President, Research & Development and Chief
Scientific Officer
Senior Vice President, U.S. Commercial Operations
Senior Vice President, AbbVie and President, Global Allergan
Aesthetics
Vice President, Controller
Mr. Gonzalez is the Chairman and Chief Executive Officer of AbbVie. He served as Abbott’s
Executive Vice President of the Pharmaceutical Products Group from July 2010 to December 2012,
and was responsible for Abbott’s worldwide pharmaceutical business, including commercial operations,
research and development, and manufacturing. He also served as President, Abbott Ventures Inc.,
Abbott’s medical technology investment arm, from 2009 to 2011. Mr. Gonzalez joined Abbott in 1977
and held various management positions. He was first appointed as an AbbVie corporate officer in
December 2012.
Mr. Michael is AbbVie’s Vice Chairman, Finance and Commercial Operations and Chief Financial
Officer. Mr. Michael previously served as Executive Vice President, Chief Financial Officer from 2019 to
2021, as Senior Vice President, Chief Financial Officer from 2018 to 2019, and as Vice President,
Controller from 2017 to 2018. He served as AbbVie’s Vice President, Treasurer from 2015 to 2016, as
Vice President, Controller, Commercial Operations from 2013 to 2015 and Vice President, Financial
Planning and Analysis from 2012 to 2013. At Abbott, Mr. Michael served as Division Controller,
Nutrition Supply Chain from 2010 to 2012. Mr. Michael joined Abbott in 1993 and was first appointed as
an AbbVie corporate officer in December 2015.
Ms. Schumacher is AbbVie’s Vice Chairman, External Affairs and Chief Legal Officer, responsible
for global legal, health economics outcomes research, corporate responsibility, brand and
communications and government affairs. Prior to her current appointment in 2018, she served as
AbbVie’s Executive Vice President, External Affairs, General Counsel and Corporate Secretary. Prior to
AbbVie’s separation from Abbott, Ms. Schumacher served as Executive Vice President, General
Counsel from 2007 to 2012. Both at Abbott and AbbVie, Ms. Schumacher also led Business Development
and Ventures and Early Stage Collaborations. Ms. Schumacher was first appointed as an AbbVie
corporate officer in December 2012. She serves on the board of General Dynamics Corporation and
CrowdStrike Holdings, Inc.
Dr. Severino is AbbVie’s Vice Chairman and President, responsible for research and development
and the corporate strategy office. He served as Executive Vice President, Research and Development
and Chief Scientific Officer from 2014 to 2018. Dr. Severino served at Amgen Inc. as Senior Vice
President, Global Development and Corporate Chief Medical Officer from 2012 to 2014, as Vice
President, Global Development from 2010 to 2012 and as Vice President, Therapeutic Area Head,
General Medicine and Inflammation Global Clinical Development from 2007 to 2012. He joined AbbVie
in 2014 and was first appointed as an AbbVie corporate officer in June 2014. Dr. Severino also serves
on the board of Avantor, Inc.
32
| 2021 Form 10-K
Mr. Gosebruch is AbbVie’s Executive Vice President, Chief Strategy Officer. He worked for more
than 20 years in the Mergers & Acquisitions Group at J.P. Morgan Securities LLC, serving as Managing
Director since 2007 and as Co-Head of M&A North America during 2015. Mr. Gosebruch joined
AbbVie in 2015 and was first appointed as an AbbVie corporate officer in December 2015. He serves
on the board of Aptinyx Inc.
Mr. Richmond is AbbVie’s Executive Vice President, Chief Human Resources Officer. He served as
Senior Vice President, Human Resources from 2013 to 2018. Mr. Richmond served as Abbott’s Divisional
Vice President of Compensation & Benefits from 2008 to 2012, as Group Vice President of Talent
and Rewards from 2007 to 2008, and as Divisional Vice President of Talent Acquisition from 2006 to
2007. Mr. Richmond joined Abbott in 2006 and was first appointed as an AbbVie corporate officer in
December 2012.
Dr. Saleki-Gerhardt is AbbVie’s Executive Vice President, Operations. She served as Senior Vice
President, Operations from 2013 to 2018. Dr. Saleki-Gerhardt served as Abbott’s Vice President,
Pharmaceuticals Manufacturing and Supply from 2011 to 2012, and as Divisional Vice President, Quality
Assurance, Global Pharmaceutical Operations from 2008 to 2011. Dr. Saleki-Gerhardt joined Abbott
in 1993 and was first appointed as an AbbVie corporate officer in December 2012. She serves on the
board of Entegris Inc.
Mr. Stewart is AbbVie’s Executive Vice President, Chief Commercial Officer. He previously served
as Senior Vice President, U.S. Commercial Operations from 2018 to 2020 and as AbbVie’s President,
Commercial Operations from 2013 to 2018. Prior to AbbVie’s separation from Abbott, he served as Vice
President, Abbott Proprietary Pharmaceutical Division, United States. Mr. Stewart joined Abbott in
1992 and was first appointed as an AbbVie corporate officer in December 2018.
Dr. Hudson is AbbVie’s Senior Vice President, Research & Development and Chief Scientific
Officer. He previously served as Vice President, Head of Oncology Discovery and Early Development
from 2016 to 2019. Prior to joining AbbVie, Dr. Hudson served at the Ontario Institute for Cancer Research
as President and Scientific Director. He also previously served as Founder and Director of the McGill
University and Genome Quebec Innovation Centre and Assistant Director of the Whitehead/MIT Center
for Genome Research. Dr. Hudson was first appointed as an AbbVie corporate officer in July 2019.
Ms. Sorg is AbbVie’s Senior Vice President, U.S. Commercial Operations. She previously served
as AbbVie’s President, U.S. Immunology and Patient Services from 2019 to 2020 and as Vice President,
Immunology and Oncology from 2016 to 2018. She served as Vice President, Immunology prior to
AbbVie’s separation from Abbott and until 2016 at AbbVie. Ms. Sorg joined Abbott in 2012 and was first
appointed as an AbbVie corporate officer in November 2020. Prior to joining Abbott, Ms. Sorg served
in management roles at Eli Lilly and Company for 23 years.
Ms. Strom is AbbVie’s Senior Vice President, AbbVie, and President, Global Allergan Aesthetics,
responsible for the worldwide operations of the aesthetics franchise. She was appointed to the position
upon AbbVie’s acquisition of Allergan in 2020 and was first appointed as an AbbVie corporate officer
in May 2020. At Allergan, Ms. Strom previously served as Senior Vice President, U.S. Medical Aesthetics
from 2018 to 2020. She joined Allergan in 2011.
Mr. Durkin is AbbVie’s Vice President, Controller. Mr. Durkin previously served as Vice President,
Internal Audit from 2016 to 2018. Prior to joining AbbVie, he served as Vice President of Finance and
Division Controller for Abbott’s Vision Care business from 2009 to 2016 and Controller Pharmaceutical
Research and Development from 2005 to 2009. Mr. Durkin joined Abbott in 1986 and was first
appointed as an AbbVie corporate officer in October 2018.
The executive officers of AbbVie are elected annually by the board of directors. All other officers
are elected by the board or appointed by the Chairman of the Board. All officers are either elected at
the first meeting of the board of directors held after the annual stockholder meeting or appointed by the
Chairman of the Board after that board meeting. Each officer holds office until a successor has been
duly elected or appointed and qualified or until the officer’s death, resignation, or removal. There are no
family relationships between any of the executive officers listed above.
2021 Form 10-K |
33
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
...................................................................................................................................................................................................................................
Principal Market
The principal market for AbbVie’s common stock is the New York Stock Exchange (Symbol:
ABBV). AbbVie’s common stock is also listed on the Chicago Stock Exchange and traded on various
regional and electronic exchanges.
Stockholders
There were 46,139 stockholders of record of AbbVie common stock as of January 31, 2022.
Performance Graph
The following graph compares the cumulative total returns of AbbVie, the S&P 500 Index and the
NYSE Arca Pharmaceuticals Index for the period from December 31, 2016 through December 31, 2021.
This graph assumes $100 was invested in AbbVie common stock and each index on December 31,
2016 and also assumes the reinvestment of dividends. The stock price performance on the following
graph is not necessarily indicative of future stock price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
This performance graph is furnished and shall not be deemed “filed” with the SEC or subject to
Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in
any of AbbVie’s filings under the Securities Act of 1933, as amended.
34
| 2021 Form 10-K
Dividends
On October 29, 2021, AbbVie’s board of directors declared an increase in the quarterly cash
dividend from $1.30 per share to $1.41 per share, payable on February 15, 2022 to stockholders of
record as of January 14, 2022. The timing, declaration, amount of and payment of any dividends by
AbbVie in the future is within the discretion of its board of directors and will depend upon many factors,
including AbbVie’s financial condition, earnings, capital requirements of its operating subsidiaries,
covenants associated with certain of AbbVie’s debt service obligations, legal requirements, regulatory
constraints, industry practice, ability to access capital markets and other factors deemed relevant by its
board of directors. Moreover, if AbbVie determines to pay any dividend in the future, there can be no
assurance that it will continue to pay such dividends or the amount of such dividends.
Issuer Purchases of Equity Securities
(a) Total
Number
of Shares
(or Units)
Purchased
3,808(1)
845(1)
904,176(1)
908,829(1)
(b)
Average
Price
Paid per Share
(or Unit)
$108.90(1)
$116.08(1)
$136.23(1)
$136.10(1)
(c) Total
Number of
Shares (or Units)
Purchased as Part
of Publicly
Announced
Plans or
Programs
—
—
879,703
879,703
(d) Maximum Number (or
Approximate Dollar Value) of
Shares (or Units) that May
Yet Be Purchased Under the
Plans or Programs
$2,643,316,927
$2,643,316,927
$2,523,316,993
$2,523,316,993
Period
October 1, 2021 – October 31, 2021
November 1, 2021 – November 30, 2021
December 1, 2021 – December 31, 2021
Total
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 — 3,808 in October; 845 in November;
and 24,473 in December.
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 6. [RESERVED]
...................................................................................................................................................................................................................................
2021 Form 10-K |
35
ITEM 7. 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). This commentary should be read in conjunction with the Consolidated Financial Statements
and accompanying notes appearing in Item 8, “Financial Statements and Supplementary Data.” This
section of this Form 10-K generally discusses 2021 and 2020 items and year-to-year comparisons
between 2021 and 2020. Discussions of 2019 items and year-to-year comparisons between 2020 and
2019 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on
Form 10-K for the fiscal year ended December 31, 2020.
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, hematologic
oncology, neuroscience, aesthetics and eye care. AbbVie uses its expertise, dedicated people and unique
approach to innovation to develop and market advanced therapies that address some of the world’s
most complex and serious diseases.
AbbVie’s products are generally sold worldwide directly to wholesalers, distributors, government
agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned
distribution centers and public warehouses. Certain products (including aesthetic products and devices)
are also sold directly to physicians and other licensed healthcare providers. In the United States,
AbbVie distributes pharmaceutical products principally through independent wholesale distributors,
with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States,
AbbVie sells products primarily to customers or through distributors, depending on the market served.
Certain products are co-marketed or co-promoted with other companies. AbbVie has approximately
50,000 employees. AbbVie operates as a single global business segment.
2021 Financial Results
AbbVie’s strategy has focused on delivering strong financial results, maximizing the benefits of the
Allergan acquisition, advancing and investing in its pipeline and returning value to shareholders while
ensuring a strong, sustainable growth business over the long term. The company’s financial performance
in 2021 included delivering worldwide net revenues of $56.2 billion, operating earnings of $17.9 billion,
diluted earnings per share of $6.45 and cash flows from operations of $22.8 billion. Worldwide net
revenues increased by 23% on a reported basis and 22% on a constant currency basis, reflecting growth
across its immunology, hematologic oncology, neuroscience, aesthetics and eye care portfolios as
well as a full period of Allergan results in 2021 compared to the prior year.
Diluted earnings per share in 2021 was $6.45 and included the following after-tax costs:
(i) $6.4 billion related to the amortization of intangible assets; (ii) $2.7 billion for the change in fair value
of contingent consideration liabilities; (iii) $948 million for acquired in-process research and
development (IPR&D); (iv) $500 million as a result of a collaboration agreement extension with Calico
Life Sciences LLC; (v) $307 million for milestones and other research and development (R&D) expenses;
(vi) $253 million for charges related to litigation matters; and (vii) $215 million of acquisition and
integration expenses. These costs were partially offset by $265 million of certain tax benefits.
Additionally, financial results reflected continued funding to support all stages of AbbVie’s pipeline assets
and continued investment in AbbVie’s on-market brands.
In October 2021, AbbVie’s board of directors declared a quarterly cash dividend of $1.41 per
share of common stock payable in February 2022. This reflects an increase of approximately 8.5%
over the previous quarterly dividend of $1.30 per share of common stock.
Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed
to reduce costs, integrate and optimize the combined organization. The integration plan is expected to
realize approximately $2.5 billion of annual cost synergies in 2022.
36
| 2021 Form 10-K
To achieve these integration objectives, AbbVie expects to incur total cumulative charges of
approximately $2 billion through 2022. These costs consist of severance and employee benefit costs
(cash severance, non-cash severance, including accelerated equity award compensation expense,
retention and other termination benefits) and other integration expenses.
Impact of the Coronavirus Disease 2019 (COVID-19)
In response to the ongoing public health crisis posed by COVID-19, AbbVie continues to focus on
ensuring the safety of employees. Throughout the pandemic, AbbVie has followed health and safety
guidance from state and local health authorities and implemented safety measures for those employees
who are returning to the workplace.
AbbVie also continues to closely manage manufacturing and supply chain resources around the
world to help ensure that patients continue to receive an uninterrupted supply of their medicines. Clinical
trial sites are being monitored locally to protect the safety of study participants, staff and employees.
While the impact of COVID-19 on AbbVie’s operations to date has not been material, AbbVie continues
to experience lower new patient starts in certain products and markets. AbbVie expects this matter
could continue to negatively impact its results of operations throughout the duration of the pandemic.
The extent to which COVID-19 may impact AbbVie’s financial condition and results of operations
remains uncertain and is dependent on numerous evolving factors, including the measures being taken
by authorities to mitigate against the spread of COVID-19, the emergence of new variants and the
availability and successful administration of effective vaccines.
2022 Strategic Objectives
AbbVie’s mission is to discover and develop innovative medicines and products that solve serious
health issues today and address the medical challenges of tomorrow while achieving top-tier financial
performance through outstanding execution. AbbVie intends to continue to advance its mission in a
number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple
long-term growth drivers; (ii) growing revenues by leveraging AbbVie’s commercial strength and
international infrastructure across therapeutic areas and ensuring strong commercial execution of new
product launches; (iii) continuing to invest in and expand its pipeline in support of opportunities in
immunology, oncology, aesthetics, neuroscience and eye care as well as continued investment in key
on-market products; (iv) expanding operating margins; and (v) returning cash to shareholders via a
strong and growing dividend while also reducing debt. In addition, AbbVie anticipates several regulatory
submissions and data readouts from key clinical trials in the next 12 months.
AbbVie expects to achieve its strategic objectives through:
• Immunology revenue growth driven by increasing market share and indication expansion of
Skyrizi and Rinvoq, as well as Humira U.S. sales growth.
• Hematologic oncology revenue growth driven by increasing market share and indication expansion
of Venclexta, as well as maintaining the strong leadership position of Imbruvica.
• Aesthetics revenue growth driven by global expansion and increasing market penetration of
Botox and Juvederm Collection.
• Neuroscience revenue growth driven by Vraylar, Botox Therapeutic, Ubrelvy and recently
launched Qulipta.
• Sustaining eye care leadership by maximizing AbbVie’s current eye care portfolio.
• The favorable impact of pipeline products and indications recently approved or currently under
regulatory review where approval is expected in 2022. These products are described in greater
detail in the section labeled “Research and Development” included as part of this Item 7.
AbbVie remains committed to driving continued expansion of operating margins and expects to
achieve this objective through continued realization of expense synergies from the Allergan acquisition,
2021 Form 10-K |
37
leverage from revenue growth, productivity initiatives in supply chain and ongoing efficiency programs
to optimize manufacturing, commercial infrastructure, administrative costs and general corporate
expenses.
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,
more than 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
Skyrizi
• In January 2021, AbbVie announced top-line results from its Phase 3 KEEPsAKE-1 and
KEEPsAKE-2 clinical trials of Skyrizi in adults with active psoriatic arthritis (PsA) met the
primary and ranked secondary endpoints.
• In January 2021, AbbVie announced top-line results from its Phase 3 ADVANCE and
MOTIVATE induction studies of Skyrizi in patients with Crohn’s disease met the primary and
key secondary endpoints.
• In April 2021, AbbVie received U.S. Food and Drug Administration (FDA) approval of Skyrizi
in a single dose pre-filled syringe and pre-filled pen. This approval will reduce the number of
injections administered per treatment.
• In June 2021, AbbVie announced top-line results from its Phase 3 FORTIFY study for Skyrizi
in patients with moderate to severe Crohn’s disease met the co-primary endpoints.
• In September 2021, AbbVie submitted a supplemental New Drug Application (sNDA) to the
FDA for Skyrizi for the treatment of patients 16 years and older with moderate to severe
Crohn’s disease.
• In November 2021, AbbVie submitted a marketing authorization application (MAA) to the
European Medicines Agency (EMA) for Skyrizi for the treatment of patients 16 years or older
with moderate to severe active Crohn’s disease who have had inadequate response, lost
response or were intolerant to conventional or biologic therapy.
• In November 2021, AbbVie announced that the European Commission (EC) approved
Skyrizi alone or in combination with methotrexate for the treatment of active PsA in adults
who have had an inadequate response or who have been intolerant to one or more disease-
modifying antirheumatic drugs.
• In January 2022, AbbVie announced that the FDA approved Skyrizi for the treatment of
adults with active PsA.
Rinvoq
• In January 2021, AbbVie announced that the EC approved Rinvoq for the treatment of adults
with active PsA and ankylosing spondylitis (AS).
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| 2021 Form 10-K
• In February 2021, AbbVie announced its Phase 3 U-ACCOMPLISH induction study of
Rinvoq for the treatment of adult patients with moderate to severe ulcerative colitis (UC) met
the primary and all ranked secondary endpoints.
• In June 2021, AbbVie announced the FDA will not meet the Prescription Drug User Fee Act
action dates for the sNDA of Rinvoq for the treatment of adults with active AS. No formal
regulatory action has been taken on the sNDA for Rinvoq in AS.
• In June 2021, AbbVie announced the results from its Phase 3 maintenance study of Rinvoq
in patients with UC met the primary and all secondary endpoints.
• In August 2021, AbbVie announced that the EC approved Rinvoq for the treatment of
moderate to severe atopic dermatitis (AD) in adults and adolescents 12 years and older who
are candidates for systemic therapy.
• In September 2021, AbbVie submitted an sNDA to the FDA and an MAA to the EMA for
Rinvoq for the treatment of adults with moderately to severely active UC.
• In October 2021, AbbVie announced the results from Study 1 of the Phase 3 SELECT-AXIS
2 clinical trial for Rinvoq in patients with active AS and inadequate response to biologic
disease-modifying antirheumatic drugs met the primary and all ranked secondary endpoints.
• In October 2021, AbbVie announced the results from Study 2 of the Phase 3 SELECT-AXIS
2 clinical trial for Rinvoq in adults with non-radiographic axial spondyloarthritis met the
primary and 12 of 14 ranked secondary endpoints.
• In December 2021, AbbVie announced top-line results from its Phase 3 U-EXCEED induction
study for Rinvoq in patients with moderate to severe Crohn’s disease who had an inadequate
response or were intolerant to biologic therapy met the primary and key secondary
endpoints.
• In December 2021, AbbVie announced an update to the U.S. Prescribing Information and
Medication Guide for Rinvoq for the treatment of adults with moderate to severe rheumatoid
arthritis (RA). This update follows a Drug Safety Communication (DSC) issued by the FDA
in September 2021 based on its final review of the post-marketing study evaluating another
JAK inhibitor (tofacitinib) in patients with RA. The DSC and this label update apply to the class
of systematically administered FDA-approved JAK inhibitors for the treatment of RA and
other inflammatory diseases. Based on this class-wide update, the U.S. label for Rinvoq will
now include additional information about risks within the Boxed Warnings and Warnings
Precautions sections. The indication has also been updated to be indicated for the treatment
of adults with moderately to severely active RA who have had an inadequate response or
intolerance to one or more tumor necrosis factor (TNF) blockers.
• In December 2021, AbbVie announced that the FDA approved Rinvoq for the treatment of
adults with active PsA who have had an inadequate response or intolerance to one or more
TNF blockers.
• In January 2022, AbbVie announced its submission of an sNDA to the FDA and an MAA to
the EMA for Rinvoq for the treatment of adults with active nr-axSpA with objective signs of
inflammation who have responded inadequately to nonsteroidal anti-inflammatory drugs.
• In January 2022, AbbVie announced that the FDA approved Rinvoq for the treatment of
moderate to severe AD in adults and children 12 years of age and older whose disease did
not respond to previous treatment and is not well controlled with other pills or injections,
including biologic medicines, or when use of other pills or injections is not recommended.
• In February 2022, AbbVie was notified that the EC is requesting the EMA to assess safety
concerns associated with JAK inhibitor products authorized in inflammatory diseases and to
evaluate the impact of these events on their benefit-risk balance. The assessment covers
all JAK inhibitors approved for use in inflammatory diseases. The request is for an opinion from
the EMA by September 30, 2022.
2021 Form 10-K |
39
Oncology
Imbruvica
• In June 2021, AbbVie announced results from its Phase 3 GLOW study comparing the
efficacy and safety of Imbruvica in combination with Venclexta versus chlorambucil plus
obinutuzumab for first-line treatment in patients with chronic lymphocytic leukemia (CLL) or
small lymphocytic lymphoma met its primary endpoint.
Venclexta
• In May 2021, AbbVie received European Commission approval for Venclyxto in combination
with a hypomethylating agent for patients with newly diagnosed acute myeloid leukemia (AML)
who are ineligible for intensive chemotherapy.
• In July 2021, AbbVie announced that the FDA granted Breakthrough Therapy Designation to
Venclexta in combination with azacitidine for the potential treatment of adult patients with
previously untreated intermediate-, high- and very high-risk myelodysplastic syndromes.
Teliso-V
• In January 2022, AbbVie announced that the FDA granted Breakthrough Therapy Designation
to investigational telisotuzumab vedotin (Teliso-V) for the treatment of patients with advanced/
metastatic epidermal growth factor receptor wild type, nonsquamous non-small cell lung
cancer with high levels of c-Met overexpression whose disease has progressed on or after
platinum-based therapy.
Neuroscience
Botox Therapeutic
• In February 2021, AbbVie received FDA approval of Botox for the treatment of detrusor
overactivity associated with a neurological condition in certain pediatric patients 5 years of
age and older.
Qulipta
• In September 2021, AbbVie announced that the FDA approved Qulipta (atogepant) for the
preventive treatment of episodic migraine in adults.
Vraylar
• In October 2021, AbbVie announced top-line results from two Phase 3 clinical trials, Study
3111-301-001 and Study 3111-302-001, evaluating the efficacy and safety of cariprazine
(Vraylar) as an adjunctive treatment for patients with major depressive disorder (MDD). In
Study 3111-301-001, Vraylar met its primary endpoint demonstrating statistically significant
change from baseline to week six in the Montgomery-Åsberg Depression Rating Scale
(MADRS) total score compared with placebo in patients with MDD. In Study 3111-302-001,
Vraylar demonstrated numerical improvement in depressive symptoms from baseline to week
six in MADRS total score compared with placebo but did not achieve statistical significance.
Safety data were consistent with the established safety profile of Vraylar across indications
with no new safety signals identified.
ABBV-951
• In October 2021, AbbVie announced that results from its pivotal Phase 3 M15-736 study of
ABBV-951 (foslevodopa/foscarbidopa) in patients with advanced Parkinson’s disease met its
primary endpoint in a 12-week study.
Eye Care
Vuity
• In October 2021, AbbVie announced that the FDA approved Vuity (pilocarpine HCl ophthalmic
solution) for the treatment of presbyopia.
40
| 2021 Form 10-K
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.
Percent change
At actual
currency
rates
At constant
currency
rates
years ended (dollars in millions)
United States
International
Net revenues
2021
$43,510
12,687
$56,197
2020
$34,879
10,925
$45,804
2019
$23,907
9,359
$33,266
The following table details AbbVie’s worldwide net revenues:
2020
2020
2021
2021
24.7% 45.9% 24.7% 45.9%
16.1% 16.7% 12.6% 17.8%
22.7% 37.7% 21.9% 38.0%
years ended December 31 (dollars in millions)
Immunology
Humira
Skyrizi
Rinvoq
Hematologic Oncology
Imbruvica
Venclexta
Aesthetics
Botox Cosmetic(a)
Juvederm Collection(a)
Other Aesthetics(a)
Neuroscience
Botox Therapeutic(a)
Vraylar(a)
United States
International
Total
United States
International
Total
United States
International
Total
United States
Collaboration revenues
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
Percent change
At actual
currency
rates
At constant
currency
rates
2021
2020
2019
2021
2020
2021
2020
$17,330
3,364
$20,694
$ 2,486
453
$ 2,939
$ 1,271
380
$ 1,651
$ 4,321
1,087
$ 5,408
934
$
886
$ 1,820
$ 1,424
808
$ 2,232
658
$
877
$ 1,535
$ 1,268
198
$ 1,466
$ 2,012
439
$ 2,451
$ 1,728
$16,112
3,720
$19,832
$ 1,385
205
$ 1,590
653
$
78
731
$
$ 4,305
1,009
$ 5,314
804
$
533
$ 1,337
$
687
425
$ 1,112
318
$
400
718
666
94
760
$
$
$
$ 1,155
232
$ 1,387
951
$
3.7%
7.6%
7.6%
8.4%
(9.6)% (13.6)%
3.5%
4.3%
79.6% >100.0%
8.4%
$14,864
(12.8)% (12.5)%
4,305
3.7%
$19,169
79.6% >100.0%
311
$
>100.0% >100.0% >100.0% >100.0%
44
84.0% >100.0%
355
47
94.8% >100.0%
— >100.0% >100.0% >100.0% >100.0%
>100.0% >100.0% >100.0% >100.0%
47
84.9% >100.0%
94.8% >100.0%
$
$
$
$ 3,830
844
$ 4,674
521
$
271
792
$
0.4%
7.7%
1.8%
16.1%
66.2%
36.1%
12.4%
19.5%
13.7%
54.4%
97.0%
69.0%
0.4%
7.7%
1.8%
16.1%
60.9%
34.0%
12.4%
19.5%
13.7%
54.4%
97.8%
69.3%
$
$
$
$
$
$
$
$
$
— >100.0%
90.0%
—
— >100.0%
— >100.0%
— >100.0%
— >100.0%
—
90.2%
— >100.0%
93.0%
—
—
—
—
—
74.3%
89.0%
76.7%
81.7%
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
>100.0%
83.9%
98.4%
>100.0%
>100.0%
>100.0%
90.2%
>100.0%
91.9%
74.3%
78.8%
75.0%
81.7%
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
2021 Form 10-K |
41
years ended December 31 (dollars in millions)
Duodopa
United States
International
Total
United States
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
United States
International
Total
United States
International
Total
United States
Ubrelvy(a)
Other Neuroscience(a)
Eye Care
Lumigan/Ganfort(a)
Alphagan/Combigan(a)
Restasis(a)
Other Eye Care(a)
Women’s Health
Lo Loestrin(a)
Orilissa/Oriahnn
Other Women’s Health(a)
Other Key Products
Mavyret
Creon
Lupron
Linzess/Constella(a)
Synthroid
All other
Total net revenues
n/m—Not meaningful
Percent change
At actual
currency
rates
At constant
currency
rates
2021
2020
2019
2021
2020
2021
2020
$
$
$
$
$
102
409
511
552
667
18
685
$
$
$
273
306
579
373
156
$
529
$ 1,234
56
$ 1,290
523
$
646
$ 1,169
$
$
$
$
$
$
423
14
437
139
6
145
209
5
214
$
754
956
$ 1,710
$ 1,191
604
$
179
$
783
$ 1,006
32
$ 1,038
$
767
$ 2,673
$56,197
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
103
391
494
125
528
11
539
165
213
378
223
103
326
755
32
787
305
388
693
346
10
356
121
4
125
181
11
192
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
97
364
461
(1.0)%
4.6%
3.4%
— >100.0%
26.3%
—
77.4%
—
27.2%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
91
2
93
—
—
—
64.7%
44.1%
53.1%
66.5%
52.5%
62.1%
63.3%
75.3%
63.8%
72.7%
66.1%
69.0%
21.9%
43.3%
22.5%
15.4%
57.7%
16.7%
16.2%
(57.5)%
11.7%
5.9%
7.4%
7.1%
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
33.3%
96.1%
34.6%
n/m
n/m
n/m
(1.0)%
(0.1)%
(0.3)%
>100.0%
26.3%
64.7%
27.0%
64.7%
38.1%
49.7%
66.5%
50.6%
61.5%
63.3%
80.1%
64.0%
72.7%
61.0%
66.1%
21.9%
33.0%
22.2%
15.4%
47.6%
16.4%
16.2%
(61.5)%
11.5%
5.9%
6.3%
6.2%
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
n/m
33.3%
97.7%
34.6%
n/m
n/m
n/m
$
785
1,045
$ 1,830
$ 1,114
600
$
152
752
649
18
667
$
$
771
$ 2,923
$45,804
$
$
$ 1,473
1,420
$ 2,893
$ 1,041
720
$
167
887
—
—
—
$
$
786
$ 2,068
$33,266
$
$
18.0%
(4.0)% (46.7)%
(8.5)% (26.4)%
(6.5)% (36.7)%
6.9%
6.9%
0.5% (16.6)%
(9.1)%
4.0% (15.2)%
n/m
55.1%
n/m
77.3%
n/m
55.7%
(0.6)% (1.9)%
(8.6)% 41.3%
37.7%
22.7%
15.0%
(4.0)% (46.7)%
(10.8)% (26.8)%
(7.8)% (36.9)%
6.9%
6.9%
0.5% (16.6)%
(5.4)%
3.4% (14.5)%
n/m
55.1%
n/m
66.4%
n/m
55.4%
(0.6)% (1.9)%
(9.7)% 42.4%
38.0%
21.9%
(a) Net revenues include Allergan product revenues after the acquisition closing date of May 8, 2020.
The following discussion and analysis of AbbVie’s net revenues by product is presented on a
constant currency basis.
Global Humira sales increased 4% in 2021 primarily driven by market growth across therapeutic
categories, partially offset by direct biosimilar competition in certain international markets. In the United
States, Humira sales increased 8% in 2021 driven by market growth across all indications. This
increase was partially offset by slightly lower market share following corresponding market share gains
of Skyrizi and Rinvoq. Internationally, Humira revenues decreased 13% in 2021 primarily driven by
direct biosimilar competition in certain international markets.
42
| 2021 Form 10-K
Net revenues for Skyrizi increased 84% in 2021 primarily driven by continued strong volume and
market share uptake since launch in 2019 as a treatment for plaque psoriasis as well as market growth
over the prior year.
Net revenues for Rinvoq increased by more than 100% in 2021 primarily driven by continued strong
volume and market share uptake since launch in 2019 for the treatment of moderate to severe rheumatoid
arthritis as well as market growth over the prior year. Net revenues were also favorably impacted by
recent regulatory approvals and expansion of Rinvoq for the treatment of psoriatic arthritis, atopic
dermatitis and ankylosing spondylitis in certain international markets.
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 increased 2% in 2021 as a result of modest favorable pricing in the United
States and increased collaboration revenues, partially offset by lower new patient starts due to the
COVID-19 pandemic and share loss in the United States.
Net revenues for Venclexta increased 34% in 2021 primarily due to continued expansion of
Venclexta for the treatment of patients with first-line CLL, relapsed/refractory CLL and first-line AML.
Net revenues for Botox Cosmetic used in facial aesthetics increased 98% in 2021 due to increased
brand investment and strong recovery from the COVID-19 pandemic. Net revenues were also favorably
impacted by a full period of Allergan results in 2021 compared to the prior year.
Net revenues for Juvederm Collection (including Juvederm Ultra XC, Juvederm Voluma XC and
other Juvederm products) used in facial aesthetics increased by more than 100% in 2021 due to
increased brand investment and strong recovery from the COVID-19 pandemic. Net revenues were
also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.
Net revenues for Botox Therapeutic used primarily in neuroscience and urology therapeutic areas
increased 75% in 2021 due to a strong recovery from the COVID-19 pandemic. Net revenues were
also favorably impacted by a full period of Allergan results in 2021 compared to the prior year.
Net revenues for Vraylar for the treatment of schizophrenia, bipolar I disorder and bipolar depression
increased 82% in 2021 due to higher market share and market growth. Net revenues were also favorably
impacted by a full period of Allergan results in 2021 compared to the prior year.
Net revenues for Ubrelvy for the acute treatment of migraine with or without aura in adults increased
by more than 100% in 2021 primarily due to increased volume and market share uptake since launch in
2020.
Net revenues for Mavyret decreased 8% in 2021 primarily driven by the continued disruption of
global HCV markets due to the COVID-19 pandemic.
Gross Margin
years ended December 31 (dollars in millions)
Gross margin
as a percent of net revenues
2021
$38,751
2020
$30,417
2019
$25,827
69%
66%
78%
Percent change
2020
2021
18%
27%
Gross margin as a percentage of net revenues in 2021 increased from 2020 primarily due to lower
amortization of inventory fair value step-up adjustment associated with the Allergan acquisition and
favorable changes in product mix, partially offset by higher amortization of intangible assets associated
with the Allergan acquisition.
Selling, General and Administrative
years ended December 31 (dollars in millions)
Selling, general and administrative
as a percent of net revenues
2021
$12,349
2020
$11,299
2019
$6,942
22%
25%
21%
Percent change
2020
2021
63%
9%
2021 Form 10-K |
43
SG&A expenses as a percentage of net revenues in 2021 decreased primarily due to lower
transaction and integration costs related to the acquisition of Allergan as well as leverage from revenue
growth and synergies realized in the period subsequent to completion of the Allergan acquisition.
Research and Development and Acquired In-Process Research and Development
years ended December 31 (dollars in millions)
Research and development
as a percent of net revenues
Acquired in-process research and development
2021
$7,084
2020
$6,557
2019
$6,407
13%
14%
19%
Percent change
2020
2021
8%
2%
$ 962
$1,198
$ 385
(20)% >100%
R&D expenses as a percentage of net revenues decreased in 2021 primarily due to the increased
scale of the combined company and synergies realized for the period subsequent to completion of the
Allergan acquisition as well as lower integration costs related to the acquisition of Allergan.
Acquired IPR&D expenses represent initial costs to acquire rights to in-process R&D projects
through R&D collaborations, licensing arrangements or other asset acquisitions. Acquired IPR&D
expense in 2021 included a charge of $400 million as a result of exercising the company’s exclusive
right to acquire TeneoOne, an affiliate of Teneobio, Inc., and TNB-383B, a BCMA-targeting
immunotherapeutic for the potential treatment of relapsed or refractory multiple myeloma and a charge
of $370 million as a result of entering into a collaboration agreement with REGENXBIO Inc. for the
development and commercialization of RGX-314, an investigational gene therapy for wet age-related
macular degeneration, diabetic retinopathy and other chronic retinal diseases. Acquired IPR&D expense
in 2020 included a charge of $750 million as a result of entering into a collaboration agreement with
Genmab A/S to research, develop and commercialize investigational bispecific antibody therapeutics for
the treatment of cancer. Acquired IPR&D expense in 2020 also included a charge of $200 million as a
result of entering into a collaboration agreement with I-Mab Biopharma for the development and
commercialization of lemzoparlimab for the treatment of multiple cancers. See Note 5 to the Consolidated
Financial Statements for additional information.
Other Operating Expense (Income), Net
Other operating expense in 2021 included a $500 million charge related to the extension of the
Calico collaboration to discover, develop and bring to market new therapies for patients with age-
related diseases, including neurodegeneration and cancer.
Other Non-Operating Expenses
years ended December 31 (in millions)
Interest expense
Interest income
Interest expense, net
Net foreign exchange loss
Other expense, net
2021
$2,423
(39)
$2,384
$
51
2,500
2020
$2,454
(174)
$2,280
$
71
5,614
2019
$1,784
(275)
$1,509
$
42
3,006
Interest expense in 2021 decreased compared to 2020 primarily due to the favorable impact of
lower interest rates on the company’s floating rate debt obligations and deleveraging, partially offset by
a higher average debt balance associated with the incremental Allergan debt acquired.
Interest income in 2021 decreased compared to 2020 primarily due to a lower average cash and
cash equivalents balance as a result of the cash paid for the Allergan acquisition and the unfavorable
impact of lower interest rates.
Other expense, net included charges related to changes in fair value of the contingent consideration
liabilities of $2.7 billion in 2021 and $5.8 billion in 2020. 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
44
| 2021 Form 10-K
sales of the acquired products and other market-based factors. In 2021, the change in fair value
included the increase in the Skyrizi contingent consideration liability due to higher estimated sales
driven by stronger market share uptake, favorable clinical trial results and the passage of time, partially
offset by higher discount rates. In 2020, the change in fair value primarily included the increase in the
Skyrizi contingent consideration liability due to higher estimated sales driven by stronger market share
uptake, lower discount rates, the passage of time and favorable clinical trial results.
Income Tax Expense
The effective income tax rate was 11% in 2021, negative 36% in 2020 and 6% in 2019. The
effective income tax rates differed from the statutory tax rate principally due to the impact of foreign
operations which reflects the impact of lower income tax rates in locations outside the United States,
tax incentives in Puerto Rico and other foreign tax jurisdictions, business development activities, changes
in enacted tax rates and laws and related restructuring, tax audit settlements and accretion on
contingent consideration. The 2020 effective income tax rate included the recognition of a net tax
benefit of $1.7 billion related to changes in tax laws and related restructuring, including certain intra-
group transfers of intellectual property and deferred tax remeasurement. The effective tax rates for these
periods also reflected the benefit from U.S. tax credits principally related to research and development
credits, the orphan drug tax credit and Puerto Rico excise tax credits. The Puerto Rico excise tax credits
relate to legislation enacted by Puerto Rico that assesses an excise tax on certain products
manufactured in Puerto Rico. The tax is levied on gross inventory purchases from entities in Puerto
Rico and is included in cost of products sold in the consolidated statements of earnings. The majority
of the tax is creditable for U.S. income tax purposes.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
years ended December 31 (in millions)
Cash flows provided by (used in)
Operating activities
Investing activities
Financing activities
2021
2020
2019
$ 22,777
(2,344)
(19,039)
$ 17,588
(37,557)
(11,501)
$13,324
596
18,708
Operating cash flows in 2021 increased from 2020. Operating cash flows in 2021 were favorably
impacted by higher net revenues of the combined company and lower acquisition-related cash expenses,
partially offset by higher income tax payments and the timing of working capital cash flows. Operating
cash flows also reflected AbbVie’s contributions to its defined benefit plans of $376 million in 2021 and
$367 million in 2020.
Investing cash flows in 2021 included $535 million cash consideration paid to acquire Soliton, Inc.
offset by cash acquired, payments made for other acquisitions and investments of $1.4 billion, capital
expenditures of $787 million and net purchases of investment securities totaling $21 million. Investing
cash flows in 2020 included $39.7 billion cash consideration paid to acquire Allergan offset by cash
acquired of $1.5 billion, net sales and maturities of investment securities totaling $1.5 billion, payments
made for other acquisitions and investments of $1.4 billion and capital expenditures of $798 million.
Financing cash flows in 2021 included early repayments of $1.8 billion aggregate principal
amount of the company’s 2.3% principal notes, $1.2 billion aggregate principal amount of the company’s
5.0% senior notes and €750 million aggregate principal amount of the company’s 0.5% senior Euro
notes. Financing cash flows also included the May 2021 repayment of $750 million aggregate principal
amount of floating rate senior notes and the November 2021 repayment of $1.3 billion aggregate
principal amount of 3.375% senior notes, $1.8 billion aggregate principal amount of 2.15% senior notes
and $750 million aggregate principal amount of floating rate senior notes at maturity. Additionally,
financing cash flows included repayment of a $1.0 billion floating rate term loan due May 2023 and
issuance of a new $1.0 billion floating rate term loan as part of the term loan refinancing in
September 2021.
Financing cash flows in 2020 included the issuance of term loans totaling $3.0 billion under the
existing $6.0 billion term loan credit agreement which were used to finance the acquisition of Allergan.
2021 Form 10-K |
45
Subsequent to these borrowings, AbbVie terminated the unused commitments of the lenders under the
term loan. Additionally, financing cash flows included the May 2020 repayment of $3.8 billion aggregate
principal amount of the company’s 2.50% senior notes, the September 2020 repayment of $650 million
aggregate principal amount of 3.375% senior notes and the November 2020 repayments of €700 million
aggregate principal amount of floating rate senior Euro notes at maturity as well as the $450 million
aggregate principal amount of 4.875% senior notes due February 2021.
Financing cash flows also included cash dividend payments of $9.3 billion in 2021 and $7.7 billion
in 2020. The increase in cash dividend payments was primarily driven by an increase of the dividend
rate and higher outstanding shares following the 286 million shares of AbbVie common stock issued to
Allergan shareholders in May 2020.
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. Under this authorization, AbbVie repurchased 6 million shares
for $670 million in 2021 and 8 million shares for $757 million in 2020. AbbVie’s remaining stock repurchase
authorization was $2.5 billion as of December 31, 2021.
No commercial paper borrowings were issued during 2021. In 2020, the company issued and
redeemed commercial paper. There were no commercial paper borrowings outstanding as of
December 31, 2021 or December 31, 2020. 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
AbbVie currently has a $4.0 billion five-year revolving credit facility that matures in August 2024.
This amended facility enables the company to borrow funds on an unsecured basis at variable interest
rates and contains various covenants. At December 31, 2021, the company was in compliance with
all covenants, and commitment fees under the credit facility were insignificant. No amounts were
outstanding under the company’s credit facility as of December 31, 2021 and 2020.
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 to the company’s credit ratings during 2021. Following the acquisition of
Allergan in 2020, S&P Global Ratings revised its ratings outlook to stable from negative and lowered
the issuer credit rating by one notch to BBB+ from A- and the short-term rating to A-2 from A-1. There
46
| 2021 Form 10-K
were no changes in Moody’s Investor Service of its Baa2 senior unsecured long-term rating and
Prime-2 short-term rating with a stable outlook.
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.
Future Cash Requirements
Contractual Obligations
The following table summarizes AbbVie’s estimated material contractual obligations as of
December 31, 2021:
(in millions)
Long-term debt, including current portion
Interest on long-term debt(a)
Contingent consideration liabilities(b)
Total
$75,962
30,002
14,887
Current
$12,428
2,392
1,249
Long-term
$63,534
27,610
13,638
(a) Includes estimated future interest payments on long-term debt. Interest payments on debt are
calculated for future periods using forecasted interest rates in effect at the end of 2021. Projected
interest payments include the related effects of interest rate swap agreements. Certain of these
projected interest payments may differ in the future based on changes in floating interest rates or
other factors or events. The projected interest payments only pertain to obligations and agreements
outstanding at December 31, 2021. See Note 10 to the Consolidated Financial Statements for
additional information regarding the company’s debt instruments and Note 11 for additional
information on the interest rate swap agreements outstanding at December 31, 2021.
(b) Includes contingent consideration liabilities which are recorded at fair value on the consolidated
balance sheet. Potential contingent consideration payments that exceed the fair value recorded on
the consolidated balance sheet are not included in the table of contractual obligations. See
Note 11 to the Consolidated Financial Statements for additional information regarding these
liabilities.
AbbVie enters into certain unconditional purchase obligations and other commitments in the
normal course of business. There have been no changes to these commitments that would have a
material impact on the company’s ability to meet either short-term or long-term future cash requirements.
Income Taxes
Future income tax cash requirements include a one-time transition tax liability on a mandatory
deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S. tax
reform enacted in 2017. The one-time transition tax liability was $3.9 billion as of December 31, 2021
and is payable in five future annual installments.
Liabilities for unrecognized tax benefits totaled $6.0 billion as of December 31, 2021. It is not
possible to reliably estimate the timing of the future cash outflows related to these liabilities. See
Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax
benefits.
Quarterly Cash Dividend
On October 29, 2021, AbbVie announced that its board of directors declared an increase in the
quarterly cash dividend from $1.30 per share to $1.41 per share beginning with the dividend payable
on February 15, 2022 to stockholders of record as of January 14, 2022. This reflects an increase of
approximately 8.5% over the previous quarterly rate. 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,
2021 Form 10-K |
47
regulatory constraints, industry practice, ability to access capital markets and other factors deemed
relevant by its board of directors.
Collaborations, Licensing and Other Arrangements
AbbVie enters into collaborative, licensing, and other arrangements with third parties that may
require future milestone payments to third parties contingent upon the achievement of certain
development, regulatory, or commercial milestones. Individually, these arrangements are insignificant in
any one annual reporting period. However, if milestones for multiple products covered by these
arrangements would happen to be reached in the same reporting period, the aggregate charge to
expense could be material to the results of operations in that period. From a business perspective, the
payments are viewed as positive because they signify that the product is successfully moving through
development and is now generating or is more likely to generate future cash flows from product sales.
It is not possible to predict with reasonable certainty whether these milestones will be achieved or the
timing for achievement. See Note 5 to the Consolidated Financial Statements for additional information
on these collaboration arrangements.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with generally accepted accounting principles
in the United States requires the use of estimates and assumptions that affect the reported amounts of
assets and liabilities and the reported amounts of revenue and expenses. A summary of the company’s
significant accounting policies is included in Note 2 to the Consolidated Financial Statements. Certain of
these policies are considered critical as these most significantly impact the company’s financial
condition and results of operations and require the most difficult, subjective, or complex judgments,
often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
Actual results may vary from these estimates.
Revenue Recognition
AbbVie recognizes revenue when control of promised goods or services is transferred to the
company’s customers, in an amount that reflects the consideration AbbVie expects to be entitled to in
exchange for those goods or services. Sales, value add and other taxes collected concurrent with
revenue-producing activities are excluded from revenue. AbbVie generates revenue primarily from
product sales. For the majority of sales, the company transfers control, invoices the customer and
recognizes revenue upon shipment to the customer.
Rebates
AbbVie provides rebates to pharmacy benefit managers, state government Medicaid programs,
insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations
and other government agencies and private entities.
Rebate and chargeback accruals are accounted for as variable consideration and are recorded as
a reduction to revenue in the period the related product is sold. Provisions for rebates and chargebacks
totaled $33.9 billion in 2021, $27.0 billion in 2020 and $18.8 billion in 2019. Rebate amounts are
typically based upon the volume of purchases using contractual or statutory prices, which may vary by
product and by payer. For each type of rebate, the factors used in the calculations of the accrual for
that rebate include the identification of the products subject to the rebate, the applicable price terms and
the estimated lag time between sale and payment of the rebate, which can be significant.
In order to establish its rebate and chargeback accruals, the company uses both internal and
external data to estimate the level of inventory in the distribution channel and the rebate claims
processing lag time for each type of rebate. To estimate the rebate percentage or net price, the company
tracks sales by product and by customer or payer. The company evaluates inventory data reported by
wholesalers, available prescription volume information, product pricing, historical experience and other
factors in order to determine the adequacy of its reserves. AbbVie regularly monitors its reserves
and records adjustments when rebate trends, rebate programs and contract terms, legislative changes,
48
| 2021 Form 10-K
or other significant events indicate that a change in the reserve is appropriate. Historically, adjustments
to rebate accruals have not been material to net earnings.
The following table is an analysis of the three largest accruals for rebates and chargebacks, which
comprise approximately 95% of the total consolidated rebate and chargebacks recorded as reductions
to revenues in 2021. Remaining rebate provisions charged against gross revenues are not significant
in the determination of operating earnings.
(in millions)
Balance at December 31, 2018
Provisions
Payments
Balance at December 31, 2019
Additions(a)
Provisions
Payments
Balance at December 31, 2020
Provisions
Payments
Balance at December 31, 2021
Medicaid
and
Medicare
Rebates
$ 1,645
4,035
(3,915)
1,765
1,266
6,715
(6,801)
2,945
9,622
(8,751)
$ 3,816
Managed
Care
Rebates
$ 1,439
5,772
(5,275)
1,936
649
8,656
(8,334)
2,907
11,306
(11,116)
$ 3,097
Wholesaler
Chargebacks
$
656
7,947
(7,917)
686
71
8,677
(8,693)
741
11,286
(11,125)
902
$
(a) Represents rebate accruals and chargeback allowances assumed in the Allergan acquisition.
Cash Discounts and Product Returns
Cash discounts and product returns, which totaled $3.6 billion in 2021, $2.4 billion in 2020 and
$1.6 billion in 2019, are accounted for as variable consideration and are recorded as a reduction to
revenue in the same period the related product is sold. The reserve for cash discounts is readily
determinable because the company’s experience of payment history is fairly consistent. Product returns
can be reliably estimated based on the company’s historical return experience.
Pension and Other Post-Employment Benefits
AbbVie engages outside actuaries to assist in the determination of the obligations and costs under
the pension and other post-employment benefit plans that are direct obligations of AbbVie. The valuation
of the funded status and the net periodic benefit cost for these plans are calculated using actuarial
assumptions. The significant assumptions, which are reviewed annually, include the discount rate, the
expected long-term rate of return on plan assets and the health care cost trend rates, and are disclosed
in Note 12 to the Consolidated Financial Statements.
The discount rate is selected based on current market rates on high-quality, fixed-income
investments at December 31 each year. AbbVie employs a yield-curve approach for countries where a
robust bond market exists. The yield curve is developed using high-quality bonds. The yield-curve
approach reflects the plans’ specific cash flows (i.e. duration) in calculating the benefit obligations by
applying the corresponding individual spot rates along the yield curve. AbbVie reflects the plans’ specific
cash flows and applies them to the corresponding individual spot rates along the yield curve in
calculating the service cost and interest cost portions of expense. For other countries, AbbVie reviews
various indices such as corporate bond and government bond benchmarks to estimate the discount rate.
AbbVie’s assumed discount rates have a significant effect on the amounts reported for defined
benefit pension and other post-employment plans as of December 31, 2021. A 50 basis point change
in the assumed discount rate would have had the following effects on AbbVie’s calculation of net periodic
2021 Form 10-K |
49
benefit costs in 2022 and projected benefit obligations as of December 31, 2021:
(in millions) (brackets denote a reduction)
Defined benefit plans
Service and interest cost
Projected benefit obligation
Other post-employment plans
Service and interest cost
Projected benefit obligation
50 basis point
Increase
Decrease
$
(90) $ 100
1,159
(1,014)
$
$
(7)
(61)
7
69
The expected long-term rate of return is based on the asset allocation, historical performance and
the current view of expected future returns. AbbVie considers these inputs with a long-term focus to
avoid short-term market influences. The current long-term rate of return on plan assets for each plan is
supported by the historical performance of the trust’s actual and target asset allocation. AbbVie’s
assumed expected long-term rate of return has a significant effect on the amounts reported for defined
benefit pension plans as of December 31, 2021 and will be used in the calculation of net periodic
benefit cost in 2022. A one percentage point change in assumed expected long-term rate of return on
plan assets would increase or decrease the net period benefit cost of these plans in 2022 by $101 million.
The health care cost trend rate is selected by reviewing historical trends and current views on
projected future health care cost increases. The current health care cost trend rate is supported by the
historical trend experience of each plan. Assumed health care cost trend rates have a significant
effect on the amounts reported for health care plans as of December 31, 2021 and will be used in the
calculation of net periodic benefit cost in 2022.
Income Taxes
AbbVie accounts for income taxes under the asset and liability method. Provisions for federal, state
and foreign income taxes are calculated on reported pretax earnings based on current tax laws. Deferred
taxes are provided using enacted tax rates on the future tax consequences of temporary differences,
which are the differences between the financial statement carrying amount of assets and liabilities and
their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established
or maintained when, based on currently available information, it is more likely than not that all or a portion
of a deferred tax asset will not be realized.
Litigation
The company 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. See Note 15 to the Consolidated Financial Statements for
additional information. 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. Accordingly, AbbVie is often initially unable to develop a best
estimate of loss and therefore, the minimum amount, which could be zero, is recorded. As information
becomes known, either the minimum loss amount is increased, resulting in additional loss provisions, or
a best estimate can be made, also resulting in additional loss provisions. Occasionally, a best estimate
amount is changed to a lower amount when events result in an expectation of a more favorable
outcome than previously expected.
Valuation of Goodwill and Intangible Assets
AbbVie has acquired and may continue to acquire significant intangible assets in connection with
business combinations that AbbVie records at fair value. Transactions involving the purchase or sale of
intangible assets occur between companies in the pharmaceuticals industry and valuations are
usually based on a discounted cash flow analysis incorporating the stage of completion. The discounted
cash flow model requires assumptions about the timing and amount of future net cash flows, risk, cost
50
| 2021 Form 10-K
of capital, terminal values and market participants. Each of these factors can significantly affect the
value of the intangible asset. IPR&D acquired in a business combination is capitalized as an indefinite-
lived intangible asset until regulatory approval is obtained, at which time it is accounted for as a definite-
lived asset and amortized over its estimated useful life, or discontinuation, at which point the intangible
asset will be written off. IPR&D acquired in transactions that are not business combinations is expensed
immediately, unless deemed to have an alternative future use. Payments made to third parties subsequent
to regulatory approval are capitalized and amortized over the remaining useful life.
AbbVie reviews the recoverability of definite-lived intangible assets whenever events or changes in
circumstances indicate the carrying value of an asset may not be recoverable. Goodwill and indefinite-
lived intangible assets are reviewed for impairment annually or when an event occurs that could
result in an impairment. See Note 2 to the Consolidated Financial Statements for additional information.
Annually, the company tests its goodwill for impairment by first assessing qualitative factors to
determine whether it is more likely than not that the fair value is less than its carrying amount. Some of
the factors considered in the assessment include general macro-economic conditions, conditions
specific to the industry and market, cost factors, the overall financial performance and whether there
have been sustained declines in the company’s share price. If the company concludes it is more likely
than not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment
test is performed. AbbVie tests indefinite-lived intangible assets for impairment by first assessing
qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying
amount. If the company concludes it is more likely than not that the fair value is less than its carrying
amount, a quantitative impairment test is performed.
For its quantitative impairment tests, the company uses an estimated future cash flow approach
that requires significant judgment with respect to future volume, revenue and expense growth rates,
changes in working capital use, the selection of an appropriate discount rate, asset groupings and other
assumptions and estimates. The estimates and assumptions used are consistent with the company’s
business plans and a market participant’s views. The use of alternative estimates and assumptions could
increase or decrease the estimated fair value of the assets and could potentially impact the company’s
results of operations. Actual results may differ from the company’s estimates.
Contingent Consideration
The fair value measurements of contingent consideration liabilities are determined as of the
acquisition date 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. Contingent consideration liabilities are
revalued to fair value at each subsequent reporting date until the related contingency is resolved. 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 employed in determining the appropriateness of
certain of these inputs, which are disclosed in Note 11 to the Consolidated Financial Statements.
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.
Recent Accounting Pronouncements
See Note 2 to the Consolidated Financial Statements for additional information on recent accounting
pronouncements.
2021 Form 10-K |
51
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
...................................................................................................................................................................................................................................
The company is exposed to risk that its earnings, cash flows and equity could be adversely
impacted by changes in foreign exchange rates and interest rates. Certain derivative instruments are
used when available on a cost-effective basis to hedge the company’s underlying economic exposures.
See Note 11 to the Consolidated Financial Statements for additional information regarding the
company’s financial instruments and hedging strategies.
Foreign Currency Risk
AbbVie’s primary net foreign currency exposures are the Euro, Japanese yen, Canadian dollar,
Chinese yuan and British pound. The following table reflects the total foreign currency forward exchange
contracts outstanding at December 31, 2021 and 2020:
as of December 31 (in millions)
Receive primarily U.S. dollars in exchange
for the following currencies:
Euro
Chinese yuan
British pound
Japanese yen
Canadian dollar
All other currencies
Total
2021
Weighted
average
exchange
rate
Fair and
carrying
value
receivable/
(payable)
1.155
6.400
1.331
113.3
1.258
n/a
$195
(1)
9
9
9
5
$226
Contract
amount
$10,253
673
605
602
571
1,549
$14,253
Contract
amount
$ 7,818
247
275
837
591
1,459
$11,227
2020
Weighted
average
exchange
rate
Fair and
carrying
value
receivable/
(payable)
1.213
6.584
1.341
103.9
1.328
n/a
$(39)
(1)
3
(7)
(23)
(14)
$(81)
The company estimates that a 10% appreciation in the underlying currencies being hedged from
their levels against the U.S. dollar, with all other variables held constant, would decrease the fair value
of foreign exchange forward contracts by $1.4 billion at December 31, 2021. If realized, this appreciation
would negatively affect earnings over the remaining life of the contracts. However, gains and losses
on the hedging instruments offset losses and gains on the hedged transactions and reduce the earnings
and stockholders’ equity volatility relating to foreign exchange. A 10% appreciation is believed to be a
reasonably possible near-term change in foreign currencies.
As of December 31, 2021, the company has €5.9 billion aggregate principal amount of unsecured
senior Euro notes outstanding, which are exposed to foreign currency risk. The company designated
these foreign currency denominated notes as hedges of its net investments in certain foreign subsidiaries
and affiliates. As a result, any foreign currency translation gains or losses related to the Euro notes
will be included in accumulated other comprehensive loss. See Note 10 to the Consolidated Financial
Statements for additional information regarding to the senior Euro notes and Note 11 to the Consolidated
Financial Statements for additional information regarding to the net investment hedging program.
Interest Rate Risk
The company estimates that an increase in interest rates of 100 basis points would adversely
impact the fair value of AbbVie’s interest rate swap contracts by approximately $244 million at
December 31, 2021. If realized, the fair value reduction would affect earnings over the remaining life of
the contracts. The company estimates that an increase of 100 basis points in long-term interest rates
would decrease the fair value of long-term debt by $5.0 billion at December 31, 2021. A 100 basis point
change is believed to be a reasonably possible near-term change in interest rates.
52
| 2021 Form 10-K
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
...................................................................................................................................................................................................................................
Consolidated Financial Statements
Consolidated Statements of Earnings
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Page
54
55
56
57
58
59
104
2021 Form 10-K |
53
AbbVie Inc. and Subsidiaries
Consolidated Statements of Earnings
years ended December 31 (in millions, except per share data)
Net revenues
Cost of products sold
Selling, general and administrative
Research and development
Acquired in-process research and development
Other operating expense (income), net
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 (benefit)
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
2021
$56,197
17,446
12,349
7,084
962
432
38,273
17,924
2,384
51
2,500
12,989
1,440
11,549
7
$11,542
2020
$45,804
15,387
11,299
6,557
1,198
—
34,441
11,363
2,280
71
5,614
3,398
(1,224)
4,622
6
$ 4,616
2019
$33,266
7,439
6,942
6,407
385
(890)
20,283
12,983
1,509
42
3,006
8,426
544
7,882
—
$ 7,882
$ 6.48
$ 6.45
$ 2.73
$ 2.72
$ 5.30
$ 5.28
1,770
1,777
1,667
1,673
1,481
1,484
The accompanying notes are an integral part of these consolidated financial statements.
54
| 2021 Form 10-K
AbbVie Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income
years ended December 31 (in millions)
Net earnings
Foreign currency translation adjustments, net of tax expense (benefit)
2021
$11,549
2020
$4,622
2019
$ 7,882
of $(35) in 2021, $28 in 2020 and $(4) in 2019
(1,153)
1,511
(98)
Net investment hedging activities, net of tax expense (benefit) of $193
in 2021, $(221) in 2020 and $22 in 2019
699
(799)
74
Pension and post-employment benefits, net of tax expense (benefit) of
$124 in 2021, $(47) in 2020 and $(323) in 2019
521
(102)
(1,243)
Marketable security activities, net of tax expense (benefit) of $— in
2021, $— in 2020 and $— in 2019
—
—
10
Cash flow hedging activities, net of tax expense (benefit) of $20 in
2021, $(23) in 2020 and $70 in 2019
Other comprehensive income (loss)
Comprehensive income
Comprehensive income attributable to noncontrolling interest
Comprehensive income attributable to AbbVie Inc.
$
151
218
11,767
7
$11,760
(131)
$ 479
5,101
6
$5,095
141
$(1,116)
6,766
—
$ 6,766
The accompanying notes are an integral part of these consolidated financial statements.
2021 Form 10-K |
55
AbbVie Inc. and Subsidiaries
Consolidated Balance Sheets
as of December 31 (in millions, except share data)
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
Short-term borrowings
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 (deficit)
Common stock, $0.01 par value, 4,000,000,000 shares authorized,
1,803,195,293 shares issued as of December 31, 2021 and 1,792,140,764
as of December 31, 2020
Common stock held in treasury, at cost, 34,857,597 shares as of
December 31, 2021 and 27,007,945 as of December 31, 2020
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total stockholders’ equity
Noncontrolling interest
Total equity
Total liabilities and equity
2021
2020
$ 9,746
84
9,977
3,128
4,993
27,928
277
5,110
75,951
32,379
4,884
$146,529
$ 8,449
30
8,822
3,310
3,562
24,173
293
5,248
82,876
33,124
4,851
$150,565
$
14
12,481
22,699
35,194
64,189
3,009
28,701
$
34
8,468
20,159
28,661
77,554
3,646
27,607
18
18
(3,143)
18,305
3,127
(2,899)
15,408
28
15,436
(2,264)
17,384
1,055
(3,117)
13,076
21
13,097
$146,529
$150,565
The accompanying notes are an integral part of these consolidated financial statements.
56
| 2021 Form 10-K
AbbVie Inc. and Subsidiaries
Consolidated Statements of Equity
years ended December 31
(in millions)
Common
shares
outstanding
Common
stock
Treasury
stock
Additional
paid-in
capital
Retained
earnings
Accumulated
other
comprehensive
loss
Noncontrolling
interest
Total
Balance at December 31, 2018
1,479
$18
$(24,108)
$14,756
$ 3,368
$(2,480)
$ —
$ (8,446)
Net earnings attributable to AbbVie Inc.
Other comprehensive loss, net of tax
Dividends declared
Purchases of treasury stock
Stock-based compensation plans and
other
—
—
—
(5)
5
Balance at December 31, 2019
1,479
Net earnings attributable to AbbVie Inc.
Other comprehensive income, net of tax
Dividends declared
Common shares and equity awards
issued for acquisition of Allergan plc
Purchases of treasury stock
Stock-based compensation plans and
other
Change in noncontrolling interest
Balance at December 31, 2020
Net earnings attributable to AbbVie Inc.
Other comprehensive income, net of tax
Dividends declared
Purchases of treasury stock
Stock-based compensation plans and
other
Change in noncontrolling interest
—
—
—
286
(10)
10
—
1,765
—
—
—
(8)
11
—
—
—
—
—
—
18
—
—
—
—
—
—
—
18
—
—
—
—
—
—
—
—
—
(428)
—
—
—
—
32
437
(24,504)
15,193
—
—
—
—
—
—
23,166
1,243
(978)
52
—
—
948
—
(2,264)
17,384
—
—
—
(934)
55
—
—
—
—
—
921
—
7,882
—
(6,533)
—
—
4,717
4,616
—
(8,278)
—
—
—
—
1,055
11,542
—
(9,470)
—
—
—
—
(1,116)
—
—
—
(3,596)
—
479
—
—
—
—
—
(3,117)
—
218
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
21
21
—
—
—
—
—
7
7,882
(1,116)
(6,533)
(428)
469
(8,172)
4,616
479
(8,278)
24,409
(978)
1,000
21
13,097
11,542
218
(9,470)
(934)
976
7
Balance at December 31, 2021
1,768
$18
$ (3,143)
$18,305
$ 3,127
$(2,899)
$28
$15,436
The accompanying notes are an integral part of these consolidated financial statements.
2021 Form 10-K |
57
AbbVie Inc. and Subsidiaries
Consolidated Statements of Cash Flows
years ended December 31 (in millions) (brackets denote cash outflows)
Cash flows from operating activities
Net earnings
Adjustments to reconcile net earnings to net cash from operating activities:
2021
2020
2019
$ 11,549 $ 4,622 $ 7,882
Depreciation
Amortization of intangible assets
Deferred income taxes
Change in fair value of contingent consideration liabilities
Stock-based compensation
Upfront costs and milestones related to collaborations
Gain on divestitures
Stemcentrx impairment
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
Net change in commercial paper 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 year
Cash and equivalents, end of year
Other supplemental information
Interest paid, net of portion capitalized
Income taxes paid
Supplemental schedule of non-cash investing and financing activities
Issuance of common shares associated with acquisitions of businesses
803
7,718
(898)
2,679
692
1,624
(68)
—
—
464
666
1,553
5,805
122
(2,325)
3,091
5,753
430
753
490
1,376
(330)
—
— 1,030
43
832
(1,321)
(142)
(197)
1,628
(1,290)
22,777
(929)
(40)
134
1,514
(573)
17,588
(74)
(231)
(225)
97
(1,018)
13,324
(525)
(1,377)
(787)
(119)
98
366
(2,344)
(38,260)
(1,350)
(798)
(61)
1,525
1,387
(37,557)
—
(1,135)
(552)
(583)
2,699
167
596
3,000
(5,683)
(20)
(7,716)
(978)
209
(321)
8
—
—
1,000
(9,414)
—
(9,261)
(934)
244
(698)
24
(19,039)
(97)
1,297
8,449
—
(699)
— (3,000)
31,482
(1,536)
(424)
(6,366)
(629)
8
(163)
35
(11,501) 18,708
7
(31,475) 32,635
7,289
39,924
$ 9,746 $ 8,449 $39,924
(5)
$ 2,712 $ 2,619 $ 1,794
1,447
1,674
3,648
— 23,979
—
The accompanying notes are an integral part of these consolidated financial statements.
58
| 2021 Form 10-K
AbbVie Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Note 1 Background
...................................................................................................................................................................................................................................
Background
The principal business of AbbVie Inc. (AbbVie or the company) is the discovery, development,
manufacturing and sale of a broad line of therapies that address some of the world’s most complex
and serious diseases. AbbVie’s products are generally sold worldwide directly to wholesalers, distributors,
government agencies, health care facilities, specialty pharmacies and independent retailers from
AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic
products and devices) are also sold directly to physicians and other licensed healthcare providers. In
the United States, AbbVie distributes pharmaceutical products principally through independent wholesale
distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the
United States, AbbVie sells products primarily to customers or through distributors, depending on the
market served.
AbbVie was incorporated in Delaware on April 10, 2012. On January 1, 2013, AbbVie became an
independent, publicly-traded company as a result of the distribution by Abbott Laboratories (Abbott) of
100% of the outstanding common stock of AbbVie to Abbott’s shareholders.
On May 8, 2020, AbbVie completed its acquisition of Allergan plc (Allergan). Refer to Note 5 for
additional information regarding this acquisition.
Note 2 Summary of Significant Accounting Policies
...................................................................................................................................................................................................................................
Use of Estimates
The consolidated financial statements have been prepared in accordance with U.S. generally
accepted accounting principles (GAAP) and necessarily include amounts based on estimates and
assumptions by management. Actual results could differ from those amounts. Significant estimates
include amounts for rebates, pension and other post-employment benefits, income taxes, litigation,
valuation of goodwill and intangible assets, contingent consideration liabilities, financial instruments and
inventory and accounts receivable exposures.
Basis of Consolidation
The consolidated financial statements include the accounts of AbbVie and all of its subsidiaries in
which a controlling interest is maintained. Controlling interest is determined by majority ownership
interest and the absence of substantive third-party participating rights or, in the case of variable interest
entities, where AbbVie is determined to be the primary beneficiary. Investments in companies over
which AbbVie has a significant influence but not a controlling interest are accounted for using the equity
method with AbbVie’s share of earnings or losses reported in other expense, net in the consolidated
statements of earnings. Intercompany balances and transactions are eliminated.
Certain reclassifications have been made to conform the prior period consolidated financial
statements to the current period presentation.
Revenue Recognition
AbbVie recognizes revenue when control of promised goods or services is transferred to the
company’s customers, in an amount that reflects the consideration AbbVie expects to be entitled to in
exchange for those goods or services. Sales, value add and other taxes collected concurrent with
revenue-producing activities are excluded from revenue. AbbVie generates revenue primarily from
product sales. For the majority of sales, the company transfers control, invoices the customer and
recognizes revenue upon shipment to the customer. The company recognizes shipping and handling
costs as an expense in cost of products sold when the company transfers control to the customer.
2021 Form 10-K |
59
Payment terms vary depending on the type and location of the customer, are based on customary
commercial terms and are generally less than one year. AbbVie does not adjust revenue for the effects
of a significant financing component for contracts where AbbVie expects the period between the
transfer of the good or service and collection to be one year or less.
Discounts, rebates, sales incentives to customers, returns and certain other adjustments are
accounted for as variable consideration. Provisions for variable consideration are based on current
pricing, executed contracts, government pricing legislation and historical data and are provided for in
the period the related revenues are recorded. Rebate amounts are typically based upon the volume of
purchases using contractual or statutory prices, which may vary by product and by payer. For each type
of rebate, factors used in the calculation of the accrual include the identification of the products
subject to the rebate, the applicable price terms and the estimated lag time between sale and payment
of the rebate, which can be significant. Sales incentives to customers are insignificant.
In addition to revenue from contracts with customers, the company also recognizes certain
collaboration revenues. See Note 6 for additional information related to the collaborations with Janssen
Biotech, Inc. and Genentech, Inc. Additionally, see Note 16 for disaggregation of revenue by product
and geography.
Research and Development Expenses
Internal research and development (R&D) costs are expensed as incurred. Clinical trial costs
incurred by third parties are expensed as the contracted work is performed. Where contingent milestone
payments are due to third parties under research and development collaborations, prior to regulatory
approval, the payment obligations are expensed when the milestone results are achieved. Payments
made to third parties subsequent to regulatory approval are capitalized as intangible assets and amortized
to cost of products sold over the remaining useful life of the related product.
Collaborations and Other Arrangements
The company enters into collaborative agreements with third parties to develop and commercialize
drug candidates. Collaborative activities may include joint research and development and
commercialization of new products. AbbVie generally receives certain licensing rights under these
arrangements. These collaborations often require upfront payments and may include additional milestone,
research and development cost sharing, royalty or profit share payments, contingent upon the
occurrence of certain future events linked to the success of the asset in development and
commercialization. Upfront payments associated with collaborative arrangements during the
development stage are expensed to acquired in-process research and development (IPR&D) expenses
in the consolidated statements of earnings. Subsequent payments made to the partner for the
achievement of milestones during the development stage are expensed to R&D expense in the
consolidated statements of earnings when the milestone is achieved. Milestone payments made to the
partner subsequent to regulatory approval are capitalized as intangible assets and amortized to cost
of products sold over the estimated useful life of the related asset. Royalties are expensed to cost of
products sold in the consolidated statements of earnings when incurred.
Advertising
Costs associated with advertising are expensed as incurred and are included in selling, general
and administrative (SG&A) expense in the consolidated statements of earnings. Advertising expenses
were $2.1 billion in 2021, $1.8 billion in 2020 and $1.1 billion in 2019.
Pension and Other Post-Employment Benefits
AbbVie records annual expenses relating to its defined benefit pension and other post-employment
benefit plans based on calculations which utilize various actuarial assumptions, including discount rates,
rates of return on assets, compensation increases, turnover rates and health care cost trend rates.
AbbVie reviews its actuarial assumptions on an annual basis and makes modifications to the assumptions
based on current rates and trends. Actuarial gains and losses are deferred in accumulated other
comprehensive income (loss) (AOCI), net of tax and are amortized over the remaining service attribution
60
| 2021 Form 10-K
periods of the employees under the corridor method. Differences between the expected long-term
return on plan assets and the actual annual return are generally amortized to net periodic benefit cost
over a five-year period.
Income Taxes
Income taxes are accounted for under the asset and liability method. Provisions for federal, state
and foreign income taxes are calculated on reported pretax earnings based on current tax laws. Deferred
taxes are provided using enacted tax rates on the future tax consequences of temporary differences,
which are the differences between the financial statement carrying amounts of assets and liabilities and
their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established
or maintained when, based on currently available information, it is more likely than not that all or a portion
of a deferred tax asset will not be realized.
Cash and Equivalents
Cash and equivalents include money market funds and time deposits with original maturities of
three months or less.
Investments
Investments consist primarily of equity securities, held-to-maturity debt securities, marketable debt
securities and time deposits. Investments in equity securities that have readily determinable fair values
are recorded at fair value. Investments in equity securities that do not have readily determinable fair
values are recorded at cost and are remeasured to fair value based on certain observable price changes
or impairment events as they occur. Held-to-maturity debt securities are recorded at cost. Gains or
losses on investments are included in other expense, net in the consolidated statements of earnings.
Investments in marketable debt securities are classified as available-for-sale and are recorded at fair
value with any unrealized holding gains or losses, net of tax, included in AOCI on the consolidated
balance sheets until realized, at which time the gains or losses are recognized in earnings.
AbbVie periodically assesses its marketable debt securities for impairment and credit losses. When
a decline in fair value of marketable debt security is due to credit related factors, an allowance for credit
losses is recorded with a corresponding charge to other expense, net in the consolidated statements
of earnings. When AbbVie determines that a non-credit related impairment has occurred, the amortized
cost basis of the investment, net of allowance for credit losses, is written down with a charge to other
expense, net in the consolidated statements of earnings and an available-for-sale investment’s unrealized
loss is reclassified from AOCI to other expense, net in the consolidated statements of earnings.
Realized gains and losses on sales of investments are computed using the first-in, first-out method
adjusted for any impairments and credit losses that were recorded in net earnings.
Accounts Receivable
Accounts receivable are stated at amortized cost less allowance for credit losses. The allowance
for credit losses reflects the best estimate of future losses over the contractual life of outstanding
accounts receivable and is determined on the basis of historical experience, specific allowances for
known troubled accounts, other currently available information including customer financial condition,
and both current and forecasted economic conditions.
Inventories
Inventories are valued at the lower of cost (first-in, first-out basis) or market. Cost includes material
and conversion costs. Inventories consisted of the following:
as of December 31 (in millions)
Finished goods
Work-in-process
Raw materials
Inventories
2021
$ 932
1,193
1,003
$3,128
2020
$1,318
1,201
791
$3,310
2021 Form 10-K |
61
Property and Equipment
as of December 31 (in millions)
Land
Buildings
Equipment
Construction in progress
Property and equipment, gross
Less accumulated depreciation
Property and equipment, net
2021
2020
$
287
2,791
6,850
799
10,727
(5,617)
$ 5,110
$
288
2,555
6,976
1,040
10,859
(5,611)
$ 5,248
Depreciation for property and equipment is recorded on a straight-line basis over the estimated
useful lives of the assets. The estimated useful life for buildings ranges from 10 to 50 years. Buildings
include leasehold improvements which are amortized over the life of the related facility lease (including
any renewal periods, if appropriate) or the asset, whichever is shorter. The estimated useful life for
equipment ranges from 2 to 25 years. Equipment includes certain computer software and software
development costs incurred in connection with developing or obtaining software for internal use and is
amortized over 3 to 10 years. Depreciation expense was $803 million in 2021, $666 million in 2020 and
$464 million in 2019.
Leases
Short-term leases with a term of 12 months or less are not recorded on the balance sheet. For
leases commencing or modified in 2019 or later, AbbVie does not separate lease components from non-
lease components.
The company records lease liabilities based on the present value of lease payments over the lease
term. AbbVie generally uses an incremental borrowing rate to discount its lease liabilities, as the rate
implicit in the lease is typically not readily determinable. Certain lease agreements include renewal
options that are under the company’s control. AbbVie includes optional renewal periods in the lease term
only when it is reasonably certain that AbbVie will exercise its option.
Variable lease payments include payments to lessors for taxes, maintenance, insurance and other
operating costs as well as payments that are adjusted based on an index or rate. The company’s lease
agreements do not contain any significant residual value guarantees or restrictive covenants.
Litigation and Contingencies
Loss contingency provisions are recorded when it is probable that a liability has been incurred and
the amount of the liability can be reasonably estimated based on existing information. When a best
estimate cannot be made, the minimum loss contingency amount in a probable range is recorded. Legal
fees are expensed as incurred. AbbVie accrues for product liability claims on an undiscounted basis.
The liabilities are evaluated quarterly and adjusted if necessary as additional information becomes
available. Receivables for insurance recoveries for product liability claims, if any, are recorded as assets
on an undiscounted basis when it is probable that a recovery will be realized.
Business Combinations
AbbVie utilizes the acquisition method of accounting for business combinations. This method
requires, among other things, that results of operations of acquired companies are included in AbbVie’s
results of operations beginning on the respective acquisition dates and that assets acquired and
liabilities assumed are recognized at fair value as of the acquisition date. Any excess of the fair value
of consideration transferred over the fair values of the net assets acquired is recognized as goodwill.
Contingent consideration liabilities are recognized at the estimated fair value on the acquisition date.
Subsequent changes to the fair value of contingent consideration liabilities are recognized in other
expense, net in the consolidated statements of earnings. The fair value of assets acquired and liabilities
assumed in certain cases may be subject to revision based on the final determination of fair value
62
| 2021 Form 10-K
during a period of time not to exceed 12 months from the acquisition date. Legal costs, due diligence
costs, business valuation costs and all other business acquisition costs are expensed when incurred.
Goodwill and Intangible Assets
Intangible assets acquired in a business combination are recorded at fair value using a discounted
cash flow model. The discounted cash flow model requires assumptions about the timing and amount
of future net cash flows, risk, the cost of capital and terminal values of market participants. Definite-
lived intangibles are amortized over their estimated useful lives using the estimated pattern of
economic benefit. AbbVie reviews the recoverability of definite-lived intangible assets whenever events
or changes in circumstances indicate the carrying value of an asset may not be recoverable. AbbVie
first compares the projected undiscounted cash flows to be generated by the asset to its carrying value.
If the undiscounted cash flows of an intangible asset are less than the carrying value, the intangible
asset is written down to its fair value. Where cash flows cannot be identified for an individual asset, the
review is applied at the lowest level for which cash flows are largely independent of the cash flows of
other assets and liabilities.
Goodwill and indefinite-lived assets are not amortized, but are subject to an impairment review
annually and more frequently when indicators of impairment exist. An impairment of goodwill could
occur if the carrying amount of a reporting unit exceeded the fair value of that reporting unit. An
impairment of indefinite-lived intangible assets would occur if the fair value of the intangible asset is less
than the carrying value.
The company tests its goodwill for impairment by first assessing qualitative factors to determine
whether it is more likely than not that the fair value is less than its carrying amount. If the company
concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount,
a quantitative impairment test is performed. AbbVie tests indefinite-lived intangible assets for
impairment by first assessing qualitative factors to determine whether it is more likely than not that the
fair value is less than its carrying amount. If the company concludes it is more likely than not that the fair
value is less than its carrying amount, a quantitative impairment test is performed. For its quantitative
impairment tests, the company uses an estimated future cash flow approach that requires significant
judgment with respect to future volume, revenue and expense growth rates, changes in working capital
use, the selection of an appropriate discount rate, asset groupings and other assumptions and
estimates. The estimates and assumptions used are consistent with the company’s business plans and
a market participant’s views. The use of alternative estimates and assumptions could increase or
decrease the estimated fair value of the assets and potentially result in different impacts to the
company’s results of operations. Actual results may differ from the company’s estimates.
Acquired In-Process Research and Development
In an asset acquisition, the initial costs to acquire rights to IPR&D projects are expensed as IPR&D
in the consolidated statements of earnings unless the project has an alternative future use. These costs
include initial payments incurred prior to regulatory approval in connection with research and
development collaboration agreements that provide rights to develop, manufacture, market and/or sell
pharmaceutical products. In a business combination, the fair value of IPR&D projects acquired are
capitalized and accounted for as indefinite-lived intangible assets until the underlying project receives
regulatory approval, at which point the intangible asset will be accounted for as a definite-lived intangible
asset, or discontinuation, at which point the intangible asset will be written off. R&D costs incurred
after the acquisition are expensed as incurred.
Foreign Currency Translation
Foreign subsidiary earnings are translated into U.S. dollars using average exchange rates. The net
assets of foreign subsidiaries are translated into U.S. dollars using period-end exchange rates. The
U.S. dollar effects that arise from translating the net assets of these subsidiaries at changing rates are
recognized in other comprehensive income (loss) in the consolidated statements of comprehensive
income. The net assets of subsidiaries in highly inflationary economies are remeasured as if the
2021 Form 10-K |
63
functional currency were the reporting currency. The remeasurement is recognized in net foreign
exchange loss in the consolidated statements of earnings.
Derivatives
All derivative instruments are recognized as either assets or liabilities at fair value on the
consolidated balance sheets and are classified as current or long-term based on the scheduled
maturity of the instrument.
For derivatives formally designated as hedges, the company assesses at inception and quarterly
thereafter whether the hedging derivatives are highly effective in offsetting changes in the fair value or
cash flows of the hedged item. The changes in fair value of a derivative designated as a fair value hedge
and of the hedged item attributable to the hedged risk are recognized in earnings immediately. The
effective portions of changes in the fair value of a derivative designated as a cash flow hedge are
reported in AOCI and are subsequently recognized in earnings consistent with the underlying hedged
item. If it is determined that a derivative is no longer highly effective as a hedge, the company discontinues
hedge accounting prospectively. If a hedged forecasted transaction becomes probable of not occurring,
any gains or losses are reclassified from AOCI to earnings. Derivatives that are not designated as
hedges are adjusted to fair value through current earnings.
The company also uses derivative instruments or foreign currency denominated debt to hedge its
net investments in certain foreign subsidiaries and affiliates. Realized and unrealized gains and losses
from these hedges are included in AOCI.
Derivative cash flows, with the exception of net investment hedges, are principally classified in the
operating section of the consolidated statements of cash flows, consistent with the underlying hedged
item. Cash flows related to net investment hedges are classified in the investing section of the
consolidated statements of cash flows.
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
ASU No. 2019-12
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740). The standard
includes simplifications related to accounting for income taxes including removing certain exceptions
related to the approach for intraperiod tax allocation and the recognition of deferred tax liabilities for
outside basis differences. The standard also clarifies the accounting for transactions that result in a
step-up in the tax basis of goodwill. AbbVie adopted the standard in the first quarter of 2021. The
adoption did not have a material impact on its consolidated financial statements.
Note 3 Supplemental Financial Information
...................................................................................................................................................................................................................................
Interest Expense, Net
years ended December 31 (in millions)
Interest expense
Interest income
Interest expense, net
2021
$2,423
(39)
$2,384
2020
$2,454
(174)
$2,280
2019
$1,784
(275)
$1,509
64
| 2021 Form 10-K
Accounts Payable and Accrued Liabilities
as of December 31 (in millions)
Sales rebates
Dividends payable
Accounts payable
Salaries, wages and commissions
Royalty and license arrangements
Other
Accounts payable and accrued liabilities
Other Long-Term Liabilities
as of December 31 (in millions)
Contingent consideration liabilities
Liabilities for unrecognized tax benefits
Income taxes payable
Pension and other post-employment benefits
Other
Other long-term liabilities
2021
$ 8,254
2,543
2,882
1,785
661
6,574
$22,699
2020
$ 7,188
2,335
2,276
1,669
483
6,208
$20,159
2021
$13,638
5,970
3,442
3,153
2,498
$28,701
2020
$12,289
5,680
3,847
3,413
2,378
$27,607
Note 4 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:
(in millions, except per share data)
Basic EPS
Net earnings attributable to AbbVie Inc.
Earnings allocated to participating securities
Earnings available to common shareholders
Weighted average basic shares of common stock 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 of common stock outstanding
Diluted earnings per share attributable to AbbVie Inc.
Years ended December 31,
2021
2020
2019
$11,542
74
$11,468
1,770
$ 6.48
$11,542
74
$11,468
1,770
7
1,777
$ 6.45
$4,616
60
$4,556
1,667
$ 2.73
$4,616
60
$4,556
1,667
6
1,673
$ 2.72
$7,882
40
$7,842
1,481
$ 5.30
$7,882
40
$7,842
1,481
3
1,484
$ 5.28
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.
2021 Form 10-K |
65
Note 5 Licensing, Acquisitions and Other Arrangements
...................................................................................................................................................................................................................................
Acquisition of Allergan
On May 8, 2020, AbbVie completed its acquisition of all outstanding equity interests in Allergan in
a cash and stock transaction. Allergan is a global pharmaceutical leader focused on developing,
manufacturing and commercializing branded pharmaceutical, device, biologic, surgical and regenerative
medicine products for patients around the world. The combination created a diverse entity with
leadership positions across immunology, hematologic oncology, aesthetics, neuroscience, eye care and
women’s health. AbbVie’s existing product portfolio and pipeline is enhanced with numerous Allergan
assets and Allergan’s product portfolio benefits from AbbVie’s commercial strength, expertise and
international infrastructure. Under the terms of the acquisition, each ordinary share of Allergan common
stock was converted into the right to receive (i) $120.30 in cash and (ii) 0.8660 of a share of AbbVie
common stock.
Total consideration for the acquisition of Allergan is summarized as follows:
(in millions)
Cash consideration paid to Allergan shareholders(a)
Fair value of AbbVie common stock issued to Allergan shareholders(b)
Fair value of AbbVie equity awards issued to Allergan equity award holders(c)
Total consideration
$39,675
23,979
430
$64,084
(a) Represents cash consideration transferred of $120.30 per outstanding Allergan ordinary share
based on 330 million Allergan ordinary shares outstanding at closing.
(b) Represents the acquisition date fair value of 286 million shares of AbbVie common stock issued to
Allergan shareholders based on the exchange ratio of 0.8660 AbbVie shares for each outstanding
Allergan ordinary share at the May 8, 2020 closing price of $83.96 per share.
(c) Represents the pre-acquisition service portion of the fair value of 11 million AbbVie stock options
and 8 million RSUs issued to Allergan equity award holders.
The acquisition of Allergan 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 was finalized during the second quarter of
2021. Measurement period adjustments to the preliminary purchase price allocation during 2021 included
(i) an increase to intangible assets of $710 million; (ii) an increase to deferred income tax liabilities of
$148 million; (iii) other individually insignificant adjustments for a net increase to identifiable net assets
of $2 million; and (iv) a corresponding decrease to goodwill of $564 million. The measurement period
adjustments primarily resulted from the completion of the valuation of certain license agreement
intangible assets based on facts and circumstances that existed as of the acquisition date and did not
result from intervening events subsequent to such date. These adjustments did not have a significant
impact on AbbVie’s results of operations in 2021 and would not have had a significant impact on prior
period results if these adjustments had been made as of the acquisition date.
66
| 2021 Form 10-K
The following table summarizes the final fair value of assets acquired and liabilities assumed as of
the acquisition date:
(in millions)
Assets acquired and liabilities assumed
Cash and equivalents
Short-term investments
Accounts receivable
Inventories
Prepaid expenses and other current assets
Investments
Property and equipment
Intangible assets
Definite-lived intangible assets
In-process research and development
Other noncurrent assets
Short-term borrowings
Current portion of long-term debt and finance lease obligations
Accounts payable and accrued liabilities
Long-term debt and finance lease obligations
Deferred income taxes
Other long-term liabilities
Total identifiable net assets
Goodwill
Total assets acquired and liabilities assumed
$ 1,537
1,421
2,374
2,340
1,982
137
2,129
68,190
1,600
1,395
(60)
(1,899)
(5,852)
(18,937)
(3,940)
(4,765)
47,652
16,432
$ 64,084
The fair value step-up adjustment to inventories of $1.2 billion was amortized to cost of products
sold when the inventory was sold to customers and was fully amortized as of December 31, 2021.
Intangible assets relate to $68.2 billion of definite-lived intangible assets and $1.6 billion of IPR&D.
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 twelve 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.
The fair value of long-term debt was determined by quoted market prices as of the acquisition date
and the total purchase price adjustment of $1.3 billion is being amortized as a reduction to interest
expense, net over the lives of the related debt.
Goodwill was calculated as the excess of the consideration transferred over the net assets
recognized and represents the future economic benefits arising from the other assets acquired that
could not be individually identified and separately recognized. Specifically, the goodwill recognized from
the acquisition of Allergan represents the value of additional growth platforms and an expanded
revenue base as well as anticipated operational synergies and cost savings from the creation of a
single combined global organization. The goodwill is not deductible for tax purposes.
Following the acquisition date, the operating results of Allergan have been included in the
consolidated financial statements. For the period from the acquisition date through December 31,
2021 Form 10-K |
67
2020, net revenues attributable to Allergan were $10.3 billion and operating losses attributable to
Allergan were $1.1 billion, inclusive of $4.0 billion of intangible asset amortization and $1.2 billion of
inventory fair value step-up amortization.
Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and
legal fees, totaled $781 million for the year ended December 31, 2020 and $103 million for the year ended
December 31, 2019 which were included in SG&A expenses in the consolidated statements of
earnings. In the fourth quarter of 2021, AbbVie recovered certain acquisition-related regulatory fees
totaling $401 million which was recorded as a reduction to SG&A expenses in the consolidated statement
of earnings for the year ended December 31, 2021.
Pro Forma Financial Information
The following table presents the unaudited pro forma combined results of AbbVie and Allergan for
2020 and 2019 as if the acquisition of Allergan had occurred on January 1, 2019:
years ended December 31 (in millions)
Net revenues
Net earnings (loss)
2020
$50,521
6,746
2019
$49,028
(38)
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 Allergan. In
order to reflect the occurrence of the acquisition on January 1, 2019 as required, the unaudited
pro forma financial information includes adjustments to reflect incremental amortization expense to be
incurred based on the final 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 year ended December 31, 2020 to the
year ended December 31, 2019. 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, 2019. 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.
Acquisition of Soliton, Inc.
In December 2021, AbbVie completed its previously announced acquisition of Soliton, Inc.
(Soliton). Soliton’s RESONIC (Rapid Acoustic Pulse device) has U.S. Food and Drug Administration
(FDA) 510(k) clearance for the long-term improvement in the appearance of cellulite up to one year. The
transaction was accounted for as a business combination using the acquisition method of accounting.
Total consideration transferred allocated to the purchase price consisted of cash consideration of
$535 million paid to holders of Soliton common stock, equity-based awards and warrants. As of the
transaction date, AbbVie acquired $407 million of intangible assets for developed product rights and
assumed deferred tax liabilities totaling $63 million. Other assets and liabilities were insignificant. The
acquisition resulted in the recognition of $177 million of goodwill which is not deductible for tax purposes.
Acquisition of Luminera
In October 2020, AbbVie entered into an agreement with Luminera, a privately held aesthetics
company based in Israel, to acquire Luminera’s full dermal filler portfolio and R&D pipeline including
HArmonyCa, a dermal filler intended for facial soft tissue augmentation. The aggregate accounting
purchase price of $186 million was comprised of a $122 million upfront cash payment and $64 million for
the acquisition date fair value of contingent consideration liabilities, for which AbbVie may owe up to
$90 million in future payments upon achievement of certain commercial milestones. The agreement was
accounted for as a business combination using the acquisition method of accounting. As of the
acquisition date, AbbVie acquired $127 million of intangible assets for in-process research and
development and $33 million of intangible assets for developed product rights. Other assets and liabilities
68
| 2021 Form 10-K
assumed were insignificant. The acquisition resulted in the recognition of $12 million of goodwill which
is not deductible for tax purposes.
Other Licensing & Acquisitions Activity
Cash outflows related to other acquisitions and investments totaled $1.4 billion in 2021, $1.4 billion
in 2020 and $1.1 billion in 2019. AbbVie recorded acquired IPR&D charges of $962 million in 2021,
$1.2 billion in 2020 and $385 million in 2019. Significant arrangements impacting 2021, 2020 and 2019,
some of which require contingent milestone payments, are summarized below.
Calico Life Sciences LLC
In July 2021, AbbVie and Calico Life Sciences LLC (Calico) entered into an extension of their
collaboration to discover, develop and bring to market new therapies for patients with age-related
diseases, including neurodegeneration and cancer. This is the second collaboration extension and
builds on the partnership established in 2014 and extended in 2018. Under the terms of the agreement,
AbbVie and Calico will each contribute an additional $500 million and the term is extended for an
additional three years. AbbVie’s contribution is payable in two equal installments beginning in 2023.
Calico will be responsible for research and early development until 2025 and will advance collaboration
projects into Phase 2a through 2030. Following completion of the Phase 2a studies, AbbVie will have
the option to exclusively license the collaboration compounds. Upon exercise, AbbVie would be
responsible for late-stage development and commercial activities. Collaboration costs and profits will
be shared equally by both parties post option exercise. During the third quarter of 2021, AbbVie recorded
$500 million as other operating expense in the consolidated statement of earnings related to its
commitments under the agreement.
TeneoOne and TNB-383B
In September 2021, AbbVie acquired TeneoOne, an affiliate of Teneobio, Inc., and TNB-383B, a
BCMA-targeting immunotherapeutic for the potential treatment of relapsed or refractory multiple
myeloma (R/R MM). In February 2019, AbbVie and TeneoOne entered a strategic transaction to develop
and commercialize TNB-383B, a bispecific antibody that simultaneously targets BCMA and CD3 and
is designed to direct the body’s own immune system to target and kill BCMA-expressing tumor cells.
AbbVie exercised its exclusive right to acquire TeneoOne and TNB-383B based on an interim analysis of
an ongoing Phase 1 study and accounted for the transaction as an asset acquisition. Under the terms
of the agreement, AbbVie made an exercise payment of $400 million which was recorded to IPR&D in the
consolidated statement of earnings in the third quarter of 2021. The agreement also included additional
payments of up to $250 million upon the achievement of certain development, regulatory and
commercial milestones.
REGENXBIO Inc.
In September 2021, AbbVie and REGENXBIO Inc. (REGENXBIO) entered into a collaboration to
develop and commercialize RGX-314, an investigational gene therapy for wet age-related macular
degeneration, diabetic retinopathy and other chronic retinal diseases. The collaboration provides AbbVie
with an exclusive global license to develop and commercialize RGX-314. REGENXBIO will be
responsible for completion of ongoing trials, AbbVie and REGENXBIO will collaborate and share costs
of additional trials, and AbbVie will lead the clinical development and commercialization of RGX-314
globally. REGENXBIO and AbbVie will share equally in pre-tax profits from net revenues of RGX-314 in
the U.S. and AbbVie will pay REGENXBIO tiered royalties on net revenues outside the U.S. Upon
closing in the fourth quarter of 2021, AbbVie made an upfront payment of $370 million to exclusively
license RGX-314 which was recorded to IPR&D in the consolidated statement of earnings for the year
ended December 31, 2021. The agreement also included additional payments of up to $1.4 billion upon
the achievement of certain development, regulatory and commercial milestones.
I-Mab Biopharma
In September 2020, AbbVie and I-Mab Biopharma (I-Mab) entered into a collaboration agreement
for the development and commercialization of lemzoparlimab, an anti-CD47 monoclonal antibody
2021 Form 10-K |
69
internally discovered and developed by I-Mab for the treatment of multiple cancers. Both companies
will collaborate to design and conduct further global clinical trials to evaluate lemzoparlimab. The
collaboration provides AbbVie an exclusive global license, excluding greater China, to develop and
commercialize lemzoparlimab. The companies will share manufacturing responsibilities with AbbVie
being the primary manufacturer for global supply. The agreement also allows for potential collaboration
on future CD47-related therapeutic agents, subject to further licenses to explore each other’s related
programs in their respective territories. The terms of the arrangement include an initial upfront payment
of $180 million to exclusively license lemzoparlimab along with a milestone payment of $20 million
based on the Phase I results, for a total of $200 million, which was recorded to IPR&D in the consolidated
statement of earnings in the fourth quarter of 2020 after regulatory approval of the transaction. In
addition, I-Mab will be eligible to receive up to $1.7 billion upon the achievement of certain clinical
development, regulatory and commercial milestones, and AbbVie will pay tiered royalties from low-to-
mid teen percentages on global net revenues outside of greater China.
Genmab A/S
In June 2020, AbbVie and Genmab A/S (Genmab) entered into a collaboration agreement to jointly
develop and commercialize three of Genmab’s early-stage investigational bispecific antibody therapeutics
and entered into a discovery research collaboration for future differentiated antibody therapeutics for
the treatment of cancer. Under the terms of the agreement, Genmab granted to AbbVie an exclusive
license to its epcoritamab (DuoBody-CD3xCD20), DuoHexaBody-CD37 and DuoBody-CD3x5T4
programs. For epcoritamab, the companies will share commercial responsibilities in the U.S. and Japan,
with AbbVie responsible for further global commercialization. Genmab will record net revenues in the
U.S. and Japan, and the parties will share equally in pre-tax profits from these sales. Genmab will receive
tiered royalties on remaining global sales. For the discovery research partnership, Genmab will
conduct Phase 1 studies for these programs and AbbVie retains the right to opt-in to program
development. During 2020, AbbVie made an upfront payment of $750 million, which was recorded to
IPR&D in the consolidated statement of earnings. AbbVie could make additional payments of up to
$3.2 billion upon the achievement of certain development, regulatory and commercial milestones for all
programs.
Reata Pharmaceuticals, Inc.
In October 2019, AbbVie and Reata Pharmaceuticals, Inc. (Reata) entered into an amended and
restated license agreement. Under the terms of the agreement, Reata reacquired exclusive development,
manufacturing and commercialization rights concerning its proprietary Nrf2 activator product platform
originally licensed to AbbVie for territories outside of the United States with respect to bardoxolone
methyl and worldwide with respect to omaveloxolone and other next-generation Nrf2 activators. As
consideration for the rights reacquired by Reata, AbbVie received a total of $250 million as of
December 31, 2020 and $80 million in cash in 2021. Total consideration of $330 million was recognized
in other operating (income) expense in the consolidated statement of earnings in 2019. In addition,
AbbVie will receive low single-digit, tiered royalties from worldwide sales of omaveloxolone and certain
next-generation Nrf2 activators.
Other Arrangements
In addition to the significant arrangements described above, AbbVie entered into several other
arrangements resulting in charges to IPR&D of $192 million in 2021, $248 million in 2020 and
$385 million in 2019. In connection with the other individually insignificant early-stage arrangements
entered into in 2021, AbbVie could make additional payments of up to $5.5 billion upon the achievement
of certain development, regulatory and commercial milestones.
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| 2021 Form 10-K
Note 6 Collaborations
...................................................................................................................................................................................................................................
The company has ongoing transactions with other entities through collaboration agreements. The
following represent the significant collaboration agreements impacting 2021, 2020 and 2019.
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 (BTK) 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.
The following table shows the profit and cost sharing relationship between Janssen and AbbVie:
years ended December 31 (in millions)
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)
2021
2019
2020
$2,018 $2,012 $1,803
844
1,009
321
295
1,087
304
AbbVie’s receivable from Janssen, included in accounts receivable, net, was $294 million at
December 31, 2021 and $283 million at December 31, 2020. AbbVie’s payable to Janssen, included in
accounts payable and accrued liabilities, was $509 million at December 31, 2021 and $562 million at
December 31, 2020.
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.
2021 Form 10-K |
71
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 R&D expenses, net of Genentech’s share. Royalties paid for Venclexta revenues
outside the United States are also included in AbbVie’s cost of products sold.
The following table shows the profit and cost sharing relationship between Genentech and AbbVie:
years ended December 31 (in millions)
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)
2021
2020
2019
$703
$533
$320
40
140
46
129
41
128
Note 7 Goodwill and Intangible Assets
...................................................................................................................................................................................................................................
Goodwill
The following table summarizes the changes in the carrying amount of goodwill:
(in millions)
Balance as of December 31, 2019
Additions(a)
Foreign currency translation adjustments
Balance as of December 31, 2020
Additions(b)
Measurement period adjustments(c)
Foreign currency translation adjustments and other
Balance as of December 31, 2021
$15,604
17,008
512
33,124
177
(564)
(358)
$32,379
(a) Goodwill additions related to the acquisition of Allergan in the second quarter of 2020 and the
acquisition of Luminera in the fourth quarter of 2020 (see Note 5).
(b) Goodwill additions related to the acquisition of Soliton in the fourth quarter of 2021 (see Note 5).
(c) Measurement period adjustments recorded in 2021 related to the acquisition of Allergan (see
Note 5).
The company performs its annual goodwill impairment assessment in the third quarter, or earlier if
impairment indicators exist. As of December 31, 2021, there were no accumulated goodwill impairment
losses.
Intangible Assets, Net
The following table summarizes intangible assets:
2021
2020
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
Gross
carrying
amount
Accumulated
amortization
Net
carrying
amount
$88,945 $(18,463) $70,482 $87,707 $(11,620) $76,087
4,912
80,999
1,877
$98,102 $(22,151) $75,951 $97,412 $(14,536) $82,876
7,828
75,281 95,535
1,877
(3,688)
(22,151)
—
(2,916)
(14,536)
—
8,487
97,432
670
4,799
670
as of December 31 (in millions)
Definite-lived intangible assets
Developed product rights
License agreements
Total definite-lived intangible assets
Indefinite-lived research and development
Total intangible assets, net
72
| 2021 Form 10-K
Definite-Lived Intangible Assets
The increase in definite-lived intangible assets during 2021 was primarily due to the measurement
period adjustments from the completion of the valuation of certain license agreements acquired in the
Allergan acquisition as well as the acquisition of Soliton. Refer to Note 5 for additional information
regarding these acquisitions and related adjustments. In 2021, AbbVie also reclassified $1.0 billion of
indefinite-lived research and development intangible assets to developed product rights upon receiving
certain regulatory approvals for Vuity, Qulipta, and HArmonyCa.
Definite-lived intangible assets are amortized over their estimated useful lives, which range
between 1 to 16 years with an average of 12 years for developed product rights and 11 years for
license agreements. Amortization expense was $7.7 billion in 2021, $5.8 billion in 2020 and $1.6 billion
in 2019 and was included in cost of products sold in the consolidated statements of earnings. The
anticipated annual amortization expense for definite-lived intangible assets recorded as of December 31,
2021 is as follows:
(in billions)
Anticipated annual amortization expense
2022
$7.2
2023
$7.5
2024
$8.0
2025
$8.4
2026
$7.9
Indefinite-Lived Intangible Assets
Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not
yet received regulatory approval. Indefinite-lived intangible assets as of December 31, 2021 primarily
relate to the acquisition of Allergan.
The company performs its annual impairment assessment of indefinite-lived intangible assets in
the third quarter, or earlier if impairment indicators exist.
In 2019, following the announcement of the decision to terminate the rovalpituzumab tesirine
(Rova-T) R&D program, the company recorded an impairment charge of $1.0 billion which represented
the remaining value of the IPR&D acquired as part of the 2016 Stemcentrx acquisition. The impairment
charge was recorded to R&D expense in the consolidated statements of earnings in 2019.
Note 8 Integration and Restructuring Plans
...................................................................................................................................................................................................................................
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. To achieve these integration
objectives, AbbVie expects to incur total cumulative charges of approximately $2 billion of charges
through 2022. These costs will consist of severance and employee benefit costs (cash severance,
non-cash severance, including accelerated equity award compensation expense, retention and other
termination benefits) and other integration expenses.
The following table summarizes the charges associated with the Allergan acquisition integration
plan:
year ended December 31 (in millions)
Cost of products sold
Research and development
Selling, general and administrative
Total charges
Severance and
employee
benefits
Other
integration
2021
$ 5
—
64
$69
2020
$109
199
388
$696
2021
$127
102
289
$518
2020
$ 21
177
237
$435
2021 Form 10-K |
73
The following table summarizes the cash activity in the recorded liability associated with the
integration plan:
year ended December 31 (in millions)
Charges
Payments and other adjustments
Accrued balance as of December 31, 2020
Charges
Payments and other adjustments
Accrued balance as of December 31, 2021
Other Restructuring
Severance and
employee
benefits
$ 594
(227)
$ 367
65
(210)
$ 222
Other
integration
$ 435
(415)
$ 20
461
(448)
$ 33
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. In 2021, 2020 and 2019, no such plans were individually significant.
Restructuring charges recorded were $59 million in 2021, $60 million in 2020 and $234 million in 2019
and were primarily related to employee severance and contractual obligations. These charges were
recorded in cost of products sold, R&D expense and SG&A expenses in the consolidated statements
of earnings based on the classification of the affected employees or operations.
The following table summarizes the cash activity in the restructuring reserve for 2021, 2020 and
$ 99
219
(178)
140
58
(108)
90
54
(111)
$ 33
2019:
(in millions)
Accrued balance as of December 31, 2018
Restructuring charges
Payments and other adjustments
Accrued balance as of December 31, 2019
Restructuring charges
Payments and other adjustments
Accrued balance as of December 31, 2020
Restructuring charges
Payments and other adjustments
Accrued balance as of December 31, 2021
74
| 2021 Form 10-K
Note 9 Leases
...................................................................................................................................................................................................................................
AbbVie’s lease portfolio primarily consists of real estate properties, vehicles and equipment. The
following table summarizes the amounts and location of operating and finance leases on the consolidated
balance sheets:
as of December 31 (in millions)
Assets
Operating
Finance
Total lease assets
Liabilities
Operating
Current
Noncurrent
Finance
Current
Noncurrent
Balance sheet caption
2021
2020
Other assets
Property and equipment, net
Accounts payable and accrued liabilities
Other long-term liabilities
Current portion of long-term debt and
finance lease obligations
Long-term debt and finance lease
obligations
$762
33
$795
$178
713
9
25
$ 895
27
$ 922
$ 175
832
8
21
Total lease liabilities
$925
$1,036
The following table summarizes the lease costs recognized in the consolidated statements of
earnings:
years ended December 31 (in millions)
Operating lease cost
Short-term lease cost
Variable lease cost
Total lease cost
2021
$226
56
71
$353
2020
$192
59
60
$311
2019
$124
34
62
$220
Sublease income and finance lease costs were insignificant in 2021, 2020 and 2019.
The following table presents the weighted-average remaining lease term and weighted-average
discount rate for operating and finance leases:
years ended December 31
Weighted-average remaining lease term (years)
Operating
Finance
Weighted-average discount rate
Operating
Finance
2021
2020
2019
7
3
8
3
5
3
2.4% 2.5% 3.9%
1.1% 1.4% 3.9%
The following table presents supplementary cash flow information regarding the company’s leases:
years ended December 31 (in millions)
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases
Right-of-use assets obtained in exchange for new operating lease liabilities
2021
2020
2019
$236
66
$185
692
$125
26
Finance lease cash flows were insignificant in 2021, 2020 and 2019. Right-of-use assets obtained
in exchange for new operating lease liabilities as of December 31, 2020 included $453 million of right-
of-use assets acquired in the Allergan acquisition.
2021 Form 10-K |
75
The following table summarizes the future maturities of AbbVie’s operating and finance lease
liabilities as of December 31, 2021:
(in millions)
2022
2023
2024
2025
2026
Thereafter
Total lease payments
Less: Interest
Present value of lease liabilities
Operating
leases
$179
162
126
105
91
317
980
89
$891
Finance
leases
$ 9
9
7
5
9
—
39
5
$34
Total(a)
$ 188
171
133
110
100
317
1,019
94
$ 925
(a) Lease payments recognized as part of lease liabilities for optional renewal periods are insignificant.
Note 10 Debt, Credit Facilities and Commitments and Contingencies
...................................................................................................................................................................................................................................
The following table summarizes long-term debt:
as of December 31 (dollars in millions)
Senior notes issued in 2012
2.90% notes due 2022
4.40% notes due 2042
Senior notes issued in 2015
3.20% notes due 2022
3.60% notes due 2025
4.50% notes due 2035
4.70% notes due 2045
Senior notes issued in 2016
2.30% notes due 2021
2.85% notes due 2023
3.20% notes due 2026
4.30% notes due 2036
4.45% notes due 2046
Senior Euro notes issued in 2016
1.375% notes due 2024 (€1,450 principal)
2.125% notes due 2028 (€750 principal)
Senior notes issued in 2018
3.375% notes due 2021
3.75% notes due 2023
4.25% notes due 2028
4.875% notes due 2048
Senior Euro notes issued in 2019
0.75% notes due 2027 (€750 principal)
1.25% notes due 2031 (€650 principal)
Senior notes issued in 2019
Floating rate notes due May 2021
Floating rate notes due November 2021
Floating rate notes due 2022
2.15% notes due 2021
2.30% notes due 2022
2.60% notes due 2024
2.95% notes due 2026
3.20% notes due 2029
76
| 2021 Form 10-K
Effective
interest rate
in 2021(a)
2021
Effective
interest rate
in 2020(a)
2020
2.97% $ 3,100
2,600
4.46%
2.97% $ 3,100
2,600
4.46%
3.28%
3.66%
4.58%
4.73%
2.40%
2.91%
3.28%
4.37%
4.50%
1.46%
2.18%
3.51%
3.84%
4.38%
4.94%
0.86%
1.30%
0.74%
0.78%
0.99%
2.23%
2.42%
2.69%
3.02%
3.25%
1,000
3,750
2,500
2,700
—
1,000
2,000
1,000
2,000
1,643
850
—
1,250
1,750
1,750
850
737
—
—
750
—
3,000
3,750
4,000
5,500
3.28%
3.66%
4.58%
4.73%
2.40%
2.91%
3.28%
4.37%
4.50%
1.46%
2.18%
3.51%
3.84%
4.38%
4.94%
0.86%
1.30%
1.33%
1.42%
1.62%
2.23%
2.42%
2.69%
3.02%
3.25%
1,000
3,750
2,500
2,700
1,800
1,000
2,000
1,000
2,000
1,783
922
1,250
1,250
1,750
1,750
922
799
750
750
750
1,750
3,000
3,750
4,000
5,500
as of December 31 (dollars in millions)
4.05% notes due 2039
4.25% notes due 2049
Term loan facilities
Floating rate notes due 2023
Floating rate notes due 2023
Floating rate notes due 2025
Senior notes acquired in 2020
5.000% notes due 2021
3.450% notes due 2022
3.250% notes due 2022
2.800% notes due 2023
3.850% notes due 2024
3.800% notes due 2025
4.550% notes due 2035
4.625% notes due 2042
4.850% notes due 2044
4.750% notes due 2045
Senior Euro notes acquired in 2020
0.500% notes due 2021 (€750 principal)
1.500% notes due 2023 (€500 principal)
1.250% notes due 2024 (€700 principal)
2.625% notes due 2028 (€500 principal)
2.125% notes due 2029 (€550 principal)
Other
Fair value hedges
Unamortized bond discounts
Unamortized deferred financing costs
Unamortized bond premiums(b)
Total long-term debt and finance lease obligations
Current portion
Noncurrent portion
Effective
interest rate
in 2021(a)
4.11%
4.29%
1.23%
0.81%
1.36%
1.53%
1.97%
1.92%
2.13%
2.07%
2.09%
3.52%
4.00%
4.11%
4.20%
0.72%
0.49%
0.65%
1.20%
1.19%
Effective
interest rate
in 2020(a)
4.11%
4.29%
1.29%
—%
1.42%
1.53%
1.97%
1.92%
2.13%
2.07%
2.09%
3.52%
4.00%
4.11%
4.20%
0.72%
0.49%
0.65%
1.20%
1.19%
2021
4,000
5,750
—
1,000
2,000
—
2,878
1,700
350
1,032
3,021
1,789
457
1,074
881
—
567
793
567
623
33
102
(130)
(251)
954
76,670
12,481
$64,189
2020
4,000
5,750
1,000
—
2,000
1,200
2,878
1,700
350
1,032
3,021
1,789
457
1,074
881
922
615
861
615
677
29
278
(146)
(287)
1,200
86,022
8,468
$77,554
(a) Excludes the effect of any related interest rate swaps.
(b) Represents unamortized purchase price adjustments of Allergan debt.
In April 2021, the company repaid $1.8 billion aggregate principal amount of 2.3% senior notes
that were scheduled to mature in May 2021. In May 2021, the company repaid €750 million aggregate
principal amount of 0.5% senior Euro notes that were scheduled to mature in June 2021. These
repayments were made by exercising, under the terms of the notes, 30-day early redemptions at 100%
of the principal amounts. The company also repaid $750 million aggregate principal amount of
floating rate senior notes at maturity in May 2021.
In September 2021, the company refinanced its $1.0 billion floating rate three-year term loan. As
part of the refinancing, the company repaid the existing $1.0 billion term loan due May 2023 and
borrowed $1.0 billion under a new term loan at a lower floating rate. All other significant terms of the
loan, including the maturity date, remained unchanged after the refinancing.
In September 2021, the company repaid $1.2 billion aggregate principal amount of 5.0% senior
notes that were scheduled to mature in December 2021. This repayment was made by exercising,
under the terms of the notes, 90-day early redemption at 100% of the principal amount.
In November 2021, the company repaid $1.3 billion aggregate principal amount of 3.375% senior
notes and $1.8 billion aggregate principal amount of 2.15% senior notes at maturity. The company also
repaid $750 million aggregate principal amount of floating rate senior notes at maturity in November 2021.
In January 2022, the company repaid $2.9 billion aggregate principal amount of 3.450% senior
notes that were scheduled to mature in March 2022. This repayment was made by exercising, under
the terms of the notes, 60-day early redemption at 100% of the principal amount.
2021 Form 10-K |
77
In connection with the acquisition of Allergan, in May 2020, the company borrowed $3.0 billion
under a $6.0 billion term loan credit agreement, of which $1.0 billion was outstanding under a floating
rate three-year term loan tranche and $2.0 billion outstanding under a floating rate five-year term loan
tranche as of December 31, 2021. Subsequent to these borrowings, AbbVie terminated the unused
commitments of the lenders under the term loan.
In May 2020, AbbVie completed its previously announced offers to exchange any and all outstanding
notes of certain series issued by Allergan for new notes to be issued by AbbVie and cash. Following the
settlement of the exchange offers, AbbVie issued $14.0 billion and €3.1 billion of new notes in exchange
for the Allergan notes tendered in the exchange offers. The aggregate principal amount of Allergan
notes that remained outstanding following the settlement of the exchange offers was approximately
$1.5 billion and €635 million. The exchange transaction was accounted for as a modification of the
assumed debt instruments.
In May 2020, the company repaid $3.8 billion aggregate principal amount of 2.5% senior notes at
maturity.
In September 2020, the company repaid $650 million aggregate principal amount of 3.375% senior
notes at maturity.
In November 2020, the company repaid €700 million aggregate principal amount of floating rate
senior Euro notes at maturity and $450 million aggregate principal amount of 4.875% senior notes due
February 2021 three months prior to maturity.
In September 2019, the company issued €1.4 billion aggregate principal amount of unsecured
senior Euro notes. These senior notes rank equally with all other unsecured and unsubordinated
indebtedness of the company. AbbVie may redeem the senior notes prior to maturity at a redemption
price equal to the principal amount of the senior notes redeemed plus a make-whole premium and may
redeem the senior notes at par between one and three months prior to maturity. In connection with the
offering, debt issuance costs incurred totaled $9 million and debt discounts totaled $5 million and are
being amortized over the respective terms of the notes to interest expense, net in the consolidated
statements of earnings. In October 2019, the company used the proceeds to redeem €1.4 billion
aggregate principal amount of 0.375% senior Euro notes that were due to mature in November 2019.
In November 2019, the company issued $30.0 billion aggregate principal amount of unsecured
senior notes. These senior notes rank equally with all other unsecured and unsubordinated indebtedness
of the company. 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. With exception of the fixed-rate notes due 2021 and 2022, 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 $173 million and debt discounts totaled $52 million, which
are being amortized over the respective terms of the notes to interest expense, net in the consolidated
statements of earnings. AbbVie used the net proceeds to fund a portion of the aggregate cash
consideration due to Allergan shareholders in connection with the acquisition described in Note 5 and
to pay related fees and expenses.
AbbVie has outstanding $4.8 billion aggregate principal amount of unsecured senior notes which
were issued in 2018. AbbVie may redeem the senior notes prior to maturity at a redemption price equal
to the principal amount of the senior notes redeemed plus a make-whole premium and AbbVie may
redeem the senior notes at par between one month and six months prior to maturity.
AbbVie has outstanding €2.2 billion aggregate principal amount of unsecured senior Euro notes
which were issued in 2016. AbbVie may redeem the senior notes prior to maturity at a redemption
price equal to the principal amount of the senior notes redeemed plus a make-whole premium and
AbbVie may redeem the senior notes at par between one and three months prior to maturity.
AbbVie has outstanding $6.0 billion aggregate principal amount of unsecured senior notes which
were issued in 2016 and $10.0 billion aggregate principal amount of unsecured senior notes which
were issued in 2015. AbbVie may redeem the senior notes, at any time, prior to maturity at a redemption
78
| 2021 Form 10-K
price equal to the principal amount of the senior notes redeemed plus a make-whole premium and
AbbVie may redeem the senior notes at par between one and six months prior to maturity.
AbbVie has outstanding $5.7 billion aggregate principal amount of unsecured senior notes which
were issued in 2012. AbbVie may redeem all of the senior notes of each series, at any time, or some
of the senior notes of each series, from time to time, at a redemption price equal to the principal amount
of the senior notes redeemed plus a make-whole premium.
At December 31, 2021, the company was in compliance with its senior note covenants and term
loan covenants.
Short-Term Borrowings
There were no commercial paper borrowings outstanding as of December 31, 2021 and
December 31, 2020. No commercial paper borrowings were issued during 2021. The weighted-
average interest rate on commercial paper borrowings was 1.8% in 2020 and 2.5% in 2019.
In August 2019, AbbVie entered into an amended and restated $4.0 billion five-year revolving credit
facility that matures in August 2024. This amended facility enables the company to borrow funds on an
unsecured basis at variable interest rates and contains various covenants, all of which the company
was in compliance with as of December 31, 2021. Commitment fees under AbbVie’s revolving credit
facilities were insignificant in 2021, 2020 and 2019. No amounts were outstanding under the company’s
credit facilities as of December 31, 2021 and December 31, 2020.
In March 2019, AbbVie repaid a $3.0 billion 364-day term loan credit agreement that was drawn on
in June 2018 and was scheduled to mature in June 2019.
Maturities of Long-Term Debt
The following table summarizes AbbVie’s debt maturities as of December 31, 2021:
as of and for the years ending December 31 (in millions)
2022
2023
2024
2025
2026
Thereafter
Total obligations and commitments
Fair value hedges, unamortized bond premiums and discounts, deferred financing costs and
finance lease obligations
Total long-term debt and finance lease obligations
Contingencies and Guarantees
$12,428
4,167
7,219
8,771
6,000
37,377
75,962
708
$76,670
In connection with the separation, AbbVie has indemnified Abbott for all liabilities resulting from the
operation of AbbVie’s business other than income tax liabilities with respect to periods prior to the
distribution date and other liabilities as agreed to by AbbVie and Abbott. AbbVie has no material exposures
to off-balance sheet arrangements and no special-purpose entities. In the ordinary course of business,
AbbVie has periodically entered into third-party agreements, such as the assignment of product
rights, which have resulted in AbbVie becoming secondarily liable for obligations for which AbbVie had
previously been primarily liable. Based upon past experience, the likelihood of payments under these
agreements is remote.
2021 Form 10-K |
79
Note 11 Financial Instruments and Fair Value Measures
...................................................................................................................................................................................................................................
Risk Management Policy
The company is exposed to foreign currency exchange rate and interest rate risks related to its
business operations. AbbVie’s hedging policy attempts to manage these risks to an acceptable level
based on the company’s judgment of the appropriate trade-off between risk, opportunity and costs. The
company uses derivative and nonderivative instruments to reduce its exposure to foreign currency
exchange rates. AbbVie also periodically enters into interest rate swaps in which the company agrees
to exchange, at specified intervals, the difference between fixed and floating interest amounts calculated
by reference to an agreed-upon notional amount. Derivative instruments are not used for trading
purposes or to manage exposure to changes in interest rates for investment securities, and none of the
company’s outstanding derivative instruments contain credit risk related contingent features; collateral
is generally not required.
Financial Instruments
Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to
manage exposures to changes in foreign exchange rates for anticipated intercompany transactions
denominated in a currency other than the functional currency of the local entity. These contracts, with
notional amounts totaling $1.1 billion at December 31, 2021 and $1.5 billion at December 31, 2020, 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
December 31, 2021 will be reclassified from 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 the third quarter of 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 November 2019 resulting in a pre-
tax gain of $383 million recognized in other comprehensive income (loss). This gain is reclassified to
interest expense, net over the term of the related debt.
The company is a party to interest rate swap contracts designed as cash flow hedges with notional
amounts totaling $750 million at December 31, 2021 and $2.3 billion at December 31, 2020. The effect
of the hedge contracts is to change a floating-rate interest obligation to a fixed rate for that portion of
the floating-rate debt. Realized and unrealized gains or losses are included in AOCI and are reclassified
to interest expense, net over the lives of the floating-rate 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 loss in the 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 $8.2 billion at December 31, 2021 and $8.6 billion at December 31, 2020.
The company also uses foreign currency forward exchange contracts or foreign currency
denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The
company had an aggregate principal amount of senior Euro notes designated as net investment hedges
of €5.9 billion at December 31, 2021 and €6.6 billion at December 31, 2020. In addition, the company
had foreign currency forward exchange contracts designated as net investment hedges with notional
amounts totaling €4.3 billion at December 31, 2021 and €971 million at December 31, 2020. 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.
80
| 2021 Form 10-K
The company is a party to interest rate swap contracts designated as fair value hedges with
notional amounts totaling $4.5 billion at December 31, 2021 and $4.8 billion at December 31, 2020.
The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that
portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the
fixed-rate debt by an offsetting amount.
No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value
hedges.
The following table summarizes the amounts and location of AbbVie’s derivative instruments on
the consolidated balance sheets:
Fair value—
Derivatives in asset position
Fair value—
Derivatives in liability position
as of December 31 (in millions)
Balance sheet caption
2021 2020 Balance sheet caption 2021 2020
Foreign currency forward exchange contracts
Designated as cash flow hedges
Prepaid expenses and other $ 51 $ 2
Accounts payable and
accrued liabilities
$ 2 $ 82
Designated as cash flow hedges
Designated as net investment hedges
Other assets — — Other long-term liabilities —
6
Prepaid expenses and other 149 — Accounts payable and
accrued liabilities
— 11
Designated as net investment hedges
Other assets
15 — Other long-term liabilities —
Not designated as hedges
Prepaid expenses and other
26
49
Accounts payable and
accrued liabilities
13
—
33
Interest rate swap contracts
Designated as cash flow hedges
Prepaid expenses and other — —
Accounts payable and
accrued liabilities
7
14
Designated as cash flow hedges
Other assets — — Other long-term liabilities — 20
Designated as fair value hedges
Prepaid expenses and other —
7
accrued liabilities —
Designated as fair value hedges
Other assets
26
131 Other long-term liabilities
15
—
—
Total derivatives
$267 $189
$37 $166
Accounts payable and
While certain derivatives are subject to netting arrangements with the company’s counterparties,
the company does not offset derivative assets and liabilities within the consolidated balance sheets.
The following table presents the pre-tax amounts of gains (losses) from derivative instruments
recognized in other comprehensive income (loss):
years ended in December 31 (in millions)
Foreign currency forward exchange contracts
Designated as cash flow hedges
Designated as net investment hedges
Interest rate swap contracts designated as cash flow hedges
Treasury rate lock agreements designated as cash flow hedges
2021
2020
2019
$ 82
341
2
—
$(71) $ (5)
33
(95)
(53)
4
— 383
Assuming market rates remain constant through contract maturities, the company expects to
reclassify pre-tax gains of $65 million into cost of products sold for foreign currency cash flow hedges, pre-
tax losses of $7 million into interest expense, net for interest rate swap cash flow hedges and pre-tax
gains of $24 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 income (loss) pre-tax gains of $577 million in
2021, pre-tax losses of $907 million in 2020 and pre-tax gains of $90 million in 2019.
2021 Form 10-K |
81
The following table summarizes the pre-tax amounts and location of derivative instrument net
gains (losses) recognized in the consolidated statements of earnings, including the net gains (losses)
reclassified out of AOCI into net earnings. See Note 13 for the amount of net gains (losses) reclassified
out of AOCI.
years ended December 31 (in millions)
Foreign currency forward exchange contracts
Statement of earnings caption
2021
2020
2019
Designated as cash flow hedges
Designated as net investment hedges
Not designated as hedges
Cost of products sold
Interest expense, net
Net foreign exchange loss
$ (87) $ 23
18
58
26
(100)
$ 167
27
(70)
Treasury rate lock agreements designated as
cash flow hedges
Interest rate swap contracts
Designated as cash flow hedges
Designated as fair value hedges
Debt designated as hedged item in fair value
hedges
Interest expense, net
24
24
3
Interest expense, net
Interest expense, net
(24)
(127)
(17)
365
1
418
Interest expense, net
127
(365)
(418)
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.
The following table summarizes the bases used to measure certain assets and liabilities carried at
fair value on a recurring basis on the consolidated balance sheet as of December 31, 2021:
(in millions)
Assets
Cash and equivalents
Money market funds and time deposits
Debt securities
Equity securities
Interest rate swap contracts
Foreign currency contracts
Total assets
Liabilities
Interest rate swap contracts
Foreign currency contracts
Contingent consideration
Total liabilities
82
| 2021 Form 10-K
Total
$ 9,746
45
46
121
26
241
$10,225
$
22
15
14,887
$14,924
Basis of fair value measurement
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$4,451
—
—
100
—
—
$4,551
$ —
—
—
$ —
$5,295
45
46
21
26
241
$5,674
$
$
22
15
—
37
$
$
—
—
—
—
—
—
—
$
—
—
14,887
$14,887
The following table summarizes the bases used to measure certain assets and liabilities carried at
fair value on a recurring basis on the consolidated balance sheet as of December 31, 2020:
(in millions)
Assets
Cash and equivalents
Money market funds and time deposits
Debt securities
Equity securities
Interest rate swap contracts
Foreign currency contracts
Total assets
Liabilities
Interest rate swap contracts
Foreign currency contracts
Contingent consideration
Total liabilities
Total
$ 8,449
12
50
159
138
51
$ 8,859
$
34
132
12,997
$13,163
Basis of fair value measurement
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$2,758
—
—
149
—
—
$2,907
$ —
—
—
$ —
$5,691
12
50
10
138
51
$5,952
$
34
132
—
$ 166
$
$
—
—
—
—
—
—
—
$
—
—
12,997
$12,997
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 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:
2021
2020
years ended December 31 (in millions)
Discount rate
Probability of payment for unachieved milestones
Probability of payment for royalties by indication(b)
Projected year of payments
Range
0.2% - 2.6%
89% - 100%
56% - 100%
2022 - 2034
Weighted
Average(a)
Range
1.7% 0.1% - 2.2%
90% 56% - 92%
96% 56% - 100%
2021 - 2034
2027
Weighted
Average(a)
1.1%
64%
91%
2027
(a) Unobservable inputs were weighted by the relative fair value of the contingent consideration
liabilities.
(b) Excluding approved indications, the estimated probability of payment ranged from 56% to 89% at
December 31, 2021 and 56% to 89% at December 31, 2020.
2021 Form 10-K |
83
There have been no transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy.
The following table presents the changes in fair value of contingent consideration liabilities which are
measured using Level 3 inputs:
years ended December 31 (in millions)
Beginning balance
Additions(a)
Change in fair value recognized in net earnings
Payments
Ending balance
2021
$12,997
—
2,679
(789)
$14,887
2020
$ 7,340
225
5,753
(321)
$12,997
2019
$4,483
—
3,091
(234)
$7,340
(a) Additions during the year ended December 31, 2020 represent contingent consideration liabilities
assumed in the Allergan acquisition as well as contingent consideration resulting from the Luminera
acquisition (see Note 5).
The change in fair value recognized in net earnings is recorded in other expense, net in the
consolidated statements of earnings. During the year-ended December 31, 2021, the company
recorded a $2.7 billion increase in the Skyrizi contingent consideration liability due to higher estimated
sales driven by stronger market share uptake, favorable clinical trial results and the passage of time,
partially offset by higher discount rates. During the year-ended December 31, 2020, the company
recorded a $5.7 billion increase in the Skyrizi contingent consideration liability due to higher estimated
future sales driven by stronger market share uptake, lower discount rates, the passage of time and
favorable clinical trial results. During the second quarter of 2019, the company recorded a $2.3 billion
increase in the Skyrizi contingent consideration liability due to higher probabilities of success, higher
estimated future sales and lower discount rates. The higher probabilities of success resulted from
the April 2019 regulatory approvals of Skyrizi for the treatment of moderate to severe plaque psoriasis.
During the third quarter of 2019, the company recorded a $91 million decrease in the Stemcentrx
contingent consideration liability due to the termination of the Rova-T R&D program.
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 December 31, 2021 are shown in the table below:
(in millions)
Liabilities
Short-term borrowings
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
Basis of fair value measurement
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Book value
Approximate
fair values
$
14
$
14
$
—
$
14
$—
12,455
11,830
11,329
501
—
64,113
$76,582
71,810
$83,654
70,757
$82,086
1,053
$1,568
—
$—
84
| 2021 Form 10-K
The book values, approximate fair values and bases used to measure the approximate fair values
of certain financial instruments as of December 31, 2020 are shown in the table below:
(in millions)
Liabilities
Short-term borrowings
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
Basis of fair value measurement
Quoted prices
in active
markets for
identical assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Book value
Approximate
fair values
$
34
$
34
$
—
$
34
$—
$ 8,461
$ 8,542
$ 8,249
$ 293
$—
77,283
$85,778
87,761
$96,337
86,137
$94,386
1,624
$1,951
—
$—
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 $149 million as of December 31, 2021 and $102 million as of December 31, 2020. No
significant cumulative upward or downward adjustments have been recorded for these investments as
of December 31, 2021.
Concentrations of Risk
Of total net accounts receivable, three U.S. wholesalers accounted for 75% as of December 31,
2021 and 72% as of December 31, 2020, and substantially all of AbbVie’s pharmaceutical product net
revenues in the United States were to these three wholesalers.
Humira (adalimumab) is AbbVie’s single largest product and accounted for approximately 37% of
AbbVie’s total net revenues in 2021, 43% in 2020 and 58% in 2019.
Note 12 Post-Employment Benefits
...................................................................................................................................................................................................................................
AbbVie sponsors various pension and other post-employment benefit plans, including defined
benefit, defined contribution and termination indemnity plans, which cover most employees worldwide.
In addition, AbbVie provides medical benefits, primarily to eligible retirees in the United States and Puerto
Rico, through other post-retirement benefit plans. Net obligations for these plans have been reflected
on the consolidated balance sheets as of December 31, 2021 and 2020.
2021 Form 10-K |
85
The following table summarizes benefit plan information for the global AbbVie-sponsored defined
benefit and other post-employment plans:
as of and for the years ended December 31 (in millions)
Projected benefit obligations
Beginning of period
Service cost
Interest cost
Employee contributions
Amendments
Actuarial (gain) loss
Benefits paid
Acquisition
Other, primarily foreign currency translation adjustments
End of period
Fair value of plan assets
Beginning of period
Actual return on plan assets
Company contributions
Employee contributions
Benefits paid
Acquisition
Other, primarily foreign currency translation adjustments
End of period
Funded status, end of period
Amounts recognized on the consolidated balance sheets
Other assets
Accounts payable and accrued liabilities
Other long-term liabilities
Net obligation
Defined
benefit plans
Other
post-employment
plans
2021
2020
2021
2020
$11,792
440
237
2
—
(8)
(281)
—
(176)
12,006
$ 8,646
370
264
2
—
1,105
(249)
1,409
245
11,792
$ 795
48
19
—
—
10
(22)
—
—
850
$1,050
42
34
—
(397)
40
(17)
43
—
795
9,702
1,000
376
2
(281)
—
(144)
10,655
—
—
17
—
(17)
—
—
—
$ (1,351) $ (2,090) $(850) $ (795)
7,116
979
367
2
(249)
1,296
191
9,702
—
—
22
—
(22)
—
—
—
$
$
991
(13)
(2,329)
$ — $ —
(23)
(772)
$ (1,351) $ (2,090) $(850) $ (795)
563
(12)
(2,641)
(26)
(824)
Actuarial loss, net
Prior service cost (credit)
Accumulated other comprehensive loss
$ 3,504
5
$ 3,509
$ 4,163
8
$ 4,171
$ 461
(370)
$ 91
$ 482
(408)
74
$
The projected benefit obligations in the table above included $3.2 billion at December 31, 2021 and
$3.5 billion at December 31, 2020, related to international defined benefit plans.
For plans reflected in the table above, the accumulated benefit obligations were $10.5 billion at
December 31, 2021 and December 31, 2020.
Information For Pension Plans With An Accumulated Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)
Accumulated benefit obligation
Fair value of plan assets
2021
$6,395
5,412
2020
$7,527
6,066
86
| 2021 Form 10-K
Information For Pension Plans With A Projected Benefit Obligation In Excess Of Plan Assets
as of December 31 (in millions)
Projected benefit obligation
Fair value of plan assets
2021
$7,788
5,447
2020
$8,719
6,066
The 2021 actuarial gain of $8 million for qualified pension plans and actuarial loss of $10 million
for other post-employment plans were primarily driven by an increase in the assumed discount rate
offset by change in demographic assumptions from 2020. The 2020 actuarial losses of $1.1 billion for
qualified pension plans and $40 million for other post-employment plans were primarily driven by a
decrease in the assumed discount rate from 2019.
AbbVie’s U.S. pension plan was modified to close the plan to new entrants effective January 1,
2022. In addition, a change to AbbVie’s U.S. retiree health benefit plan was approved in 2020 and
communicated to employees and retirees in October 2020. Beginning in 2022, Medicare-eligible retirees
and Medicare-eligible dependents will choose health care coverage from insurance providers through
a private Medicare exchange. AbbVie will continue to provide financial support to Medicare-eligible
retirees. This change to the U.S. retiree health benefit plan decreased AbbVie’s post-employment
benefit obligation and increased AbbVie’s unrecognized prior service credit as of December 31, 2020
by $397 million.
In connection with the Allergan acquisition, AbbVie assumed certain post-employment benefit
obligations which were recorded at fair value. Upon acquisition in the second quarter of 2020, the
excess of projected benefit obligations over the plan assets was recognized as a liability totaling
$156 million.
Amounts Recognized in Other Comprehensive Income (Loss)
The following table summarizes the pre-tax losses (gains) included in other comprehensive income
(loss):
years ended December 31 (in millions)
Defined benefit plans
Actuarial loss (gain)
Amortization of prior service cost
Amortization of actuarial loss
Foreign exchange loss (gain) and other
Total loss (gain)
Other post-employment plans
Actuarial loss
Prior service credit
Amortization of prior service credit
Amortization of actuarial loss
Total loss (gain)
2021
2020
2019
$(345) $ 701
(2)
(227)
56
$(662) $ 528
(2)
(288)
(27)
$1,231
—
(109)
(6)
$1,116
$ 10
$ 40
— (397)
4
39
(26)
(32)
$ 17
$ 451
—
—
(1)
$(379) $ 450
2021 Form 10-K |
87
Net Periodic Benefit Cost
years ended December 31 (in millions)
Defined benefit plans
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss
Net periodic benefit cost
Other post-employment plans
Service cost
Interest cost
Amortization of prior service credit
Amortization of actuarial loss
Net periodic benefit cost
2021
2020
2019
$ 440
237
(663)
2
288
$ 304
$ 370
264
(575)
2
227
$ 288
$ 269
259
(474)
—
109
$ 163
$ 48
19
(39)
32
$ 60
$ 42
34
(4)
26
$ 98
$ 25
29
—
1
$ 55
The components of net periodic benefit cost other than service cost are included in other expense,
net in the consolidated statements of earnings.
Weighted-Average Assumptions Used in Determining Benefit Obligations at the Measurement Date
as of December 31
Defined benefit plans
Discount rate
Rate of compensation increases
Cash balance interest crediting rate
Other post-employment plans
Discount rate
2021
2020
2.8% 2.4%
5.2% 4.6%
2.7% 2.8%
3.1% 2.8%
The assumptions used in calculating the December 31, 2021 measurement date benefit obligations
will be used in the calculation of net periodic benefit cost in 2022.
Weighted-Average Assumptions Used in Determining Net Periodic Benefit Cost
years ended December 31
Defined benefit plans
Discount rate for determining service cost
Discount rate for determining interest cost
Expected long-term rate of return on plan assets
Expected rate of change in compensation
Cash balance interest crediting rate
Other post-employment plans
Discount rate for determining service cost
Discount rate for determining interest cost
2021
2020
2019
2.6% 3.1% 4.0%
2.2% 3.0% 4.0%
7.1% 7.1% 7.6%
4.6% 4.6% 4.6%
2.8% 2.8% 2.8%
3.0% 3.7% 4.7%
2.2% 3.2% 4.3%
For the December 31, 2021 post-retirement health care obligations remeasurement, the company
assumed a 5.9% pre-65 (2.1% post-65) annual rate of increase in the per capita cost of covered health
care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (1.8% post-65) in 2029
and remain at that level thereafter. For purposes of measuring the 2021 post-retirement health care costs,
the company assumed a 6.0% pre-65 (2.3% post-65) annual rate of increase in the per capita cost of
covered health care benefits. The pre-65 rate was assumed to decrease gradually to 4.5% (2.0% post-65)
for 2029 and remain at that level thereafter.
88
| 2021 Form 10-K
Defined Benefit Pension Plan Assets
as of December 31 (in millions)
Equities
U.S. large cap(a)
U.S. mid cap(b)
International(c)
Fixed income securities
U.S. government securities(d)
Corporate debt instruments(d)
Non-U.S. government securities(d)
Other(d)
Absolute return funds(e)
Real assets
Other(f)
Total
Total assets measured at NAV
Fair value of plan assets
as of December 31 (in millions)
Equities
U.S. large cap(a)
U.S. mid cap(b)
International(c)
Fixed income securities
U.S. government securities(d)
Corporate debt instruments(d)
Non-U.S. government securities(d)
Other(d)
Absolute return funds(e)
Real assets
Other(f)
Total
Total assets measured at NAV
Fair value of plan assets
Basis of fair value measurement
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$1,428
198
458
95
179
445
268
5
10
216
$3,302
$ —
—
—
133
766
157
5
95
—
45
$1,201
$—
—
—
—
—
—
—
—
—
—
$—
Basis of fair value measurement
Quoted prices in
active markets for
identical assets
(Level 1)
Significant other
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
$1,143
164
524
18
178
397
294
4
10
250
$2,982
$ —
—
—
114
676
147
3
306
—
2
$1,248
$—
—
—
—
—
—
—
—
—
—
$—
2021
$ 1,428
198
458
228
945
602
273
100
10
261
$ 4,503
6,152
$10,655
2020
$1,143
164
524
132
854
544
297
310
10
252
$4,230
5,472
$9,702
(a) A mix of index funds and actively managed equity accounts that are benchmarked to various large
cap indices.
(b) A mix of index funds and actively managed equity accounts that are benchmarked to various mid
cap indices.
(c) A mix of index funds and actively managed equity accounts that are benchmarked to various
non-U.S. equity indices in both developed and emerging markets.
(d) Securities held by actively managed accounts, index funds and mutual funds.
2021 Form 10-K |
89
(e) Primarily funds having global mandates with the flexibility to allocate capital broadly across a wide
range of asset classes and strategies, including but not limited to equities, fixed income, commodities,
financial futures, currencies and other securities, with objectives to outperform agreed upon
benchmarks of specific return and volatility targets.
(f)
Investments in cash and cash equivalents.
Equities and registered investment companies having quoted prices are valued at the published
market prices. Fixed income securities that are valued using significant other observable inputs are
quoted at prices obtained from independent financial service industry-recognized vendors. Investments
held in pooled investment funds, common collective trusts or limited partnerships are valued at the
net asset value (NAV) practical expedient to estimate fair value. The NAV is provided by the fund
administrator and is based on the value of the underlying assets owned by the fund minus its liabilities.
The investment mix of equity securities, fixed income and other asset allocation strategies is based
upon achieving a desired return, balancing higher return, more volatile equity securities and lower return,
less volatile fixed income securities. Investment allocations are established for each plan and are
generally made across a range of markets, industry sectors, capitalization sizes and in the case of
fixed income securities, maturities and credit quality. The 2021 target investment allocation for the AbbVie
Pension Plan was 62.5% in equity securities, 22.5% in fixed income securities and 15% in asset
allocation strategies and other holdings. There are no known significant concentrations of risk in the
plan assets of the AbbVie Pension Plan or of any other plans.
The expected return on plan assets assumption for each plan is based on management’s
expectations of long-term average rates of return to be achieved by the underlying investment portfolio.
In establishing this assumption, management considers historical and expected returns for the asset
classes in which the plans are invested, as well as current economic and capital market conditions.
Expected Benefit Payments
The following table summarizes total benefit payments expected to be paid to plan participants
including payments funded from both plan and company assets:
years ending December 31 (in millions)
2022
2023
2024
2025
2026
2027 to 2031
Defined Contribution Plan
Defined
benefit plans
$ 293
312
334
356
379
2,291
Other
post-employment
plans
$ 27
30
31
34
36
224
AbbVie maintains defined contribution savings plans for the benefit of its eligible employees. The
expense recognized for these plans was $267 million in 2021, $191 million in 2020 and $102 million in
2019. AbbVie provides certain other post-employment benefits, primarily salary continuation
arrangements, to qualifying employees and accrues for the related cost over the service lives of the
employees.
Note 13 Equity
...................................................................................................................................................................................................................................
Stock-Based Compensation
In May 2021, stockholders of the company approved the AbbVie Amended and Restated 2013
Incentive Stock Program (the Amended Plan), which amends and restates the AbbVie 2013 Incentive
Stock Program (2013 ISP). AbbVie grants stock-based awards to eligible employees pursuant to the
Amended Plan, which provides for several different forms of benefits, including non-qualified stock
90
| 2021 Form 10-K
options, RSUs and various performance-based awards. Under the Amended Plan, a total of 144 million
shares of AbbVie common stock have been reserved for issuance as awards to AbbVie employees.
The 2013 ISP also facilitated the assumption of certain awards granted under Abbott’s incentive stock
program, which were adjusted and converted into Abbott and AbbVie stock-based awards as a result of
AbbVie’s separation from Abbott.
AbbVie measures compensation expense for stock-based awards based on the grant date fair
value of the awards and the estimated number of awards that are expected to vest. Forfeitures are
estimated based on historical experience at the time of grant and are revised in subsequent periods if
actual forfeitures differ from those estimates. Compensation cost for stock-based awards is amortized
over the service period, which could be shorter than the vesting period if an employee is retirement
eligible. Retirement eligible employees generally are those who are age 55 or older and have at least
10 years of service.
Stock-based compensation expense is principally related to awards issued pursuant to the 2013
ISP and the Amended Plan and is summarized as follows:
years ended December 31 (in millions)
Cost of products sold
Research and development
Selling, general and administrative
Pre-tax compensation expense
Tax benefit
After-tax compensation expense
2021
$ 46
226
420
692
126
$566
2020
$ 47
247
459
753
131
$622
2019
$ 29
171
230
430
80
$350
Realized excess tax benefits associated with stock-based compensation totaled $50 million in
2021, $34 million in 2020 and $15 million in 2019.
Stock Options
Stock options awarded to employees typically have a contractual term of 10 years and generally
vest in one-third increments over a three-year period. The exercise price is equal to at least 100% of
the market value on the date of grant. The fair value is determined using the Black-Scholes model. The
weighted-average grant-date fair values of stock options granted were $16.28 in 2021, $12.14 in 2020
and $12.54 in 2019.
In connection with the Allergan acquisition, during the second quarter of 2020, AbbVie issued
11.2 million stock options to holders of Allergan options as a result of the conversion of such options.
These options were fair-valued using a lattice valuation model. Refer to Note 5 for additional information
regarding the Allergan acquisition.
The following table summarizes AbbVie stock option activity in 2021:
(options in thousands, aggregate intrinsic value in millions) Options
15,691
Outstanding at December 31, 2020
1,147
Granted
(4,278)
Exercised
(186)
Lapsed and forfeited
12,374
Outstanding at December 31, 2021
Weighted-
average
exercise price
$ 73.90
105.94
57.77
105.28
$ 81.98
Exercisable at December 31, 2021
9,424
$ 78.03
Weighted-
average
remaining
life (in years)
4.7
Aggregate
intrinsic value
$559
4.7
3.6
$661
$541
The total intrinsic value of options exercised was $239 million in 2021, $186 million in 2020 and
$22 million in 2019. The total fair value of options vested during 2021 was $21 million. As of
December 31, 2021, $10 million of unrecognized compensation cost related to stock options is expected
to be recognized as expense over approximately the next two years.
2021 Form 10-K |
91
RSUs and Performance Shares
RSUs awarded to employees other than senior executives and other key employees generally vest
in ratable increments over a three or four-year period. Recipients of these RSUs are entitled to receive
dividend equivalents as dividends are declared and paid during the RSU vesting period.
The majority of the equity awards AbbVie grants to its senior executives and other key employees
are performance-based. Equity awards granted to senior executives and other key employees consist
of a combination of performance-vested RSUs and performance shares as well as non-qualified stock
options described above. The performance-vested RSUs have the potential to vest in one-third
increments during a three-year performance period. For awards granted in 2021 and 2020, performance
is based on AbbVie’s return on invested capital relative to a defined peer group of pharmaceutical,
biotech and life science companies. For awards granted in 2019, the tranches tied to 2021 performance
are based on AbbVie’s return on equity relative to a defined peer group of pharmaceutical, biotech
and life sciences companies. The recipient may receive one share of AbbVie common stock for each
vested award. The performance shares have the potential to vest over a three-year performance period
and may be earned based on AbbVie’s EPS achievement and AbbVie’s total stockholder return
(TSR) (a market condition) relative to a defined peer group of pharmaceutical, biotech and life sciences
companies. Dividend equivalents on performance-vested RSUs and performance shares accrue
during the performance period and are payable at vesting only to the extent that shares are earned.
The weighted-average grant-date fair value of RSUs and performance shares generally is
determined based on the number of shares/units granted and the quoted price of AbbVie’s common
stock on the date of grant. The weighted-average grant-date fair values of performance shares with a
TSR market condition are determined using the Monte Carlo simulation model.
The following table summarizes AbbVie RSU and performance share activity for 2021:
(share units in thousands)
Outstanding at December 31, 2020
Granted
Vested
Forfeited
Outstanding at December 31, 2021
Share units
15,918
7,556
(6,735)
(1,849)
14,890
Weighted-average
grant date fair value
$ 87.03
105.79
91.63
83.35
$ 94.93
The fair market value of RSUs and performance shares (as applicable) vested was $718 million in
2021, $618 million in 2020 and $371 million in 2019.
In connection with the Allergan acquisition, during the second quarter of 2020, AbbVie issued
8.2 million RSUs to holders of Allergan equity awards based on a conversion factor described in the
transaction agreement. Refer to Note 5 for additional information regarding the Allergan acquisition.
As of December 31, 2021, $592 million of unrecognized compensation cost related to RSUs and
performance shares is expected to be recognized as expense over approximately the next two years.
Cash Dividends
Cash dividends declared per common share totaled $5.31 in 2021, $4.84 in 2020 and $4.39 in
2019. The following table summarizes quarterly cash dividends declared during 2021, 2020 and 2019:
2021
2020
2019
Payment
Date
Date
Declared
10/29/21 02/15/22
09/10/21 11/15/21
06/17/21 08/16/21
02/18/21 05/14/21
Dividend Per
Share
$1.41
$1.30
$1.30
$1.30
Payment
Date
Date
Declared
10/30/20 02/16/21
09/11/20 11/16/20
06/17/20 08/14/20
02/20/20 05/15/20
Dividend Per
Share
$1.30
$1.18
$1.18
$1.18
Payment
Date
Date
Declared
11/01/19 02/14/20
09/06/19 11/15/19
06/20/19 08/15/19
02/21/19 05/15/19
Dividend Per
Share
$1.18
$1.07
$1.07
$1.07
92
| 2021 Form 10-K
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 these programs are recorded at
acquisition cost, including related expenses and are available for general corporate purposes.
AbbVie repurchased 6 million shares for $670 million in 2021, 8 million shares for $757 million in
2020 and 4 million shares for $300 million in 2019. AbbVie’s remaining stock repurchase authorization
was $2.5 billion as of December 31, 2021.
Accumulated Other Comprehensive Loss
The following table summarizes the changes in each component of accumulated other
comprehensive loss, net of tax, for 2021, 2020 and 2019:
(in millions) (brackets denote losses)
Balance as of December 31, 2018
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 December 31, 2019
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 December 31, 2020
Other comprehensive income
(loss) before reclassifications
Net losses (gains) reclassified from
accumulated other
comprehensive loss
Net current-period other
Foreign
currency
translation
adjustments
$ (830)
Net
investment
hedging
activities
$ (65)
Pension
and post-
employment
benefits
$(1,722)
Marketable
security
activities
$(10)
Cash flow
hedging
activities
$ 147
Total
$(2,480)
(98)
95
(1,330)
12
298
(1,023)
—
(21)
87
(2)
(157)
(93)
(98)
(928)
74
9
(1,243)
(2,965)
1,511
(785)
(300)
—
(14)
198
1,511
583
(799)
(790)
(102)
(3,067)
(1,153)
720
298
—
(21)
223
10
—
—
—
—
—
—
—
141
288
(1,116)
(3,596)
(108)
318
(23)
161
(131)
157
479
(3,117)
76
75
(59)
277
comprehensive income (loss)
Balance as of December 31, 2021
(1,153)
$ (570)
699
$ (91)
521
$(2,546)
—
$ —
151
$ 308
218
$(2,899)
Other comprehensive income (loss) for 2021 included foreign currency translation adjustments
totaling losses of $1.2 billion and the offsetting impact of net investment hedging activities totaling
gains of $699 million, which were principally due to the impact of the weakening of the Euro on the
translation of the company’s Euro-denominated assets. Other comprehensive income (loss) for 2020
included foreign currency translation adjustments totaling gains of $1.5 billion and the offsetting impact
of net investment hedging activities totaling losses of $799 million, which were principally due to the
impact of the strengthening of the Euro on the translation of the company’s Euro-denominated assets.
Other comprehensive income (loss) for 2019 included pension and post-employment benefit plan
losses of $1.2 billion primarily due to an actuarial loss driven by lower discount rates. See Note 12 for
additional information.
2021 Form 10-K |
93
The table below presents the impact on AbbVie’s consolidated statements of earnings for significant
amounts reclassified out of each component of accumulated other comprehensive loss:
years ended December 31 (in millions) (brackets denote gains)
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 and other(b)
Tax benefit
Total reclassifications, net of tax
Cash flow hedging activities
Losses (gains) on foreign currency forward exchange contracts(c)
Gains on treasury rate lock agreements(a)
Losses (gains) on interest rate swap contracts(a)
Tax expense (benefit)
Total reclassifications, net of tax
(a) Amounts are included in interest expense, net (see Note 11).
2021
2020
2019
$ (26) $ (18) $ (27)
6
$ (21) $ (14) $ (21)
4
5
$283
(60)
$223
$251
(53)
$198
$ 110
(23)
$ 87
$ 87
(24)
24
(12)
$ 75
$ (23) $(167)
(3)
(1)
14
$ (23) $(157)
(24)
17
7
(b) Amounts are included in the computation of net periodic benefit cost (see Note 12).
(c) Amounts are included in cost of products sold (see Note 11).
Other
In addition to common stock, AbbVie’s authorized capital includes 200 million shares of preferred
stock, par value $0.01. As of December 31, 2021, no shares of preferred stock were issued or
outstanding.
Note 14 Income Taxes
...................................................................................................................................................................................................................................
Earnings Before Income Tax Expense
years ended December 31 (in millions)
Domestic
Foreign
Total earnings before income tax expense
Income Tax Expense
years ended December 31 (in millions)
Current
Domestic
Foreign
Total current taxes
Deferred
Domestic
Foreign
Total deferred taxes
2021
2019
2020
$ (1,644) $(4,467) $ (2,784)
11,210
7,865
$ 8,426
$ 3,398
14,633
$12,989
2021
2020
2019
$1,987
351
$2,338
$
907
194
$ 1,101
$ 102
320
$ 422
$ (839) $
(59)
(58) $(137)
259
$ (898) $(2,325) $ 122
(2,267)
Total income tax expense (benefit)
$1,440
$(1,224) $ 544
94
| 2021 Form 10-K
Effective Tax Rate Reconciliation
years ended December 31
Statutory tax rate
Effect of foreign operations
U.S. tax credits
Impacts related to U.S. tax reform
Non-deductible expenses
Tax law changes and related restructuring
Tax audit settlements
All other, net
Effective tax rate
2021
21.0%
(5.4)
(2.8)
—
0.3
(2.0)
(0.4)
0.4
11.1%
2020
21.0%
2.4
(10.6)
(1.1)
7.2
(48.5)
(5.1)
(1.3)
(36.0)%
2019
21.0%
(8.4)
(3.3)
(1.6)
1.0
3.1
(4.7)
(0.6)
6.5%
The effective income tax rate fluctuates year to year due to the allocation of the company’s taxable
earnings among jurisdictions, as well as certain discrete factors and events in each year, including
changes in tax law, acquisitions and collaborations. The effective income tax rates in 2021, 2020 and
2019 differed from the statutory tax rate principally due to the impact of foreign operations which reflects
the impact of lower income tax rates in locations outside the United States, tax incentives in Puerto
Rico and other foreign tax jurisdictions, business development activities, changes in enacted tax rates
and laws and related restructuring, tax audit settlements and accretion on contingent consideration. The
2020 effective income tax rate included the recognition of a net tax benefit of $1.7 billion related to
changes in tax laws and related restructuring, including certain intra-group transfers of intellectual
property and deferred tax remeasurement. The effective tax rates for these periods also reflected the
benefit from U.S. tax credits principally related to research and development credits, the orphan drug tax
credit and Puerto Rico excise tax credits. The Puerto Rico excise tax credits relate to legislation
enacted by Puerto Rico that assesses an excise tax on certain products manufactured in Puerto Rico.
The tax is levied on gross inventory purchases from entities in Puerto Rico and is included in cost of
products sold in the consolidated statements of earnings. The majority of the tax is creditable for U.S.
income tax purposes.
The effective income tax rate in 2020 and 2019 included impacts related to U.S. tax reform. The
Tax Cuts and Jobs Act (the Act) was signed into law in December 2017, resulting in significant changes
to the U.S. corporate tax system, including a one-time transition tax on a mandatory deemed
repatriation of earnings of certain foreign subsidiaries that were previously untaxed. The Act also
created a minimum tax on certain foreign sourced earnings. The company’s accounting policy for the
minimum tax on foreign sourced earnings is to report the tax effects on the basis that the minimum tax
will be recognized in tax expense in the year it is incurred as a period expense. The effective income
tax rates for 2019 also included the effects of Stemcentrx impairment related expenses.
2021 Form 10-K |
95
Deferred Tax Assets and Liabilities
as of December 31 (in millions)
Deferred tax assets
Compensation and employee benefits
Accruals and reserves
Chargebacks and rebates
Advance payments
Net operating losses and other credit carryforwards
Other
Total deferred tax assets
Valuation allowances
Total net deferred tax assets
Deferred tax liabilities
Excess of book basis over tax basis of intangible assets
Excess of book basis over tax basis in investments
Other
Total deferred tax liabilities
Net deferred tax liabilities
2021
2020
$
937
667
837
809
10,095
1,234
14,579
(9,391)
5,188
$ 1,109
438
555
324
2,765
1,371
6,562
(1,203)
5,359
(4,711)
(308)
(904)
(5,923)
(5,274)
(335)
(982)
(6,591)
$ (735) $(1,232)
The decrease in net deferred tax assets is primarily related to the utilization of net operating losses
and other carryforwards offset by an increase in advance payments. The decrease in deferred tax
liabilities is primarily related to amortization of intangible assets.
In connection with the Allergan acquisition, the company recorded adjustments within the
measurement period in 2021 related to foreign net operating losses and other credit carryforwards that
are not expected to be realized. The adjustments reflected an increase of $8.2 billion to deferred tax
assets and an offsetting increase to valuation allowances, resulting in no net impact to deferred tax
assets.
The company had valuation allowances of $9.4 billion as of December 31, 2021 and $1.2 billion as
of December 31, 2020. These were principally related to foreign and state net operating losses and other
credit carryforwards that are not expected to be realized.
As of December 31, 2021, the company had U.S. federal and state credit carryforwards of
$214 million as well as U.S. federal, state and foreign net operating loss carryforwards of $34.4 billion,
which will expire at various times through 2041. The remaining U.S. federal and foreign loss carryforwards
of $3.2 billion have no expiration.
The Act significantly changed the timing and manner in which earnings of foreign subsidiaries are
subject to U.S. tax. Therefore, unremitted foreign earnings subject to the Act’s transition tax are not
considered indefinitely reinvested. Post-2017 earnings subject to the U.S. minimum tax on foreign
sourced earnings or eligible for the 100 percent foreign dividends received deduction are also not
considered indefinitely reinvested earnings. However, the company generally considers instances of
outside basis differences in foreign subsidiaries that would incur additional U.S. tax upon reversal
(e.g., capital gain distribution) to be permanent in duration. The unrecognized tax liability is not
practicable to determine.
96
| 2021 Form 10-K
Unrecognized Tax Benefits
years ended December 31 (in millions)
Beginning balance
Increase due to acquisition
Increase due to current year tax positions
Increase due to prior year tax positions
Decrease due to prior year tax positions
Settlements
Lapse of statutes of limitations
Ending balance
2021
$5,264
2020
$2,661
— 2,674
91
59
(7)
(141)
(73)
$5,264
208
137
(62)
(24)
(34)
$5,489
2019
$2,852
—
113
499
(21)
(749)
(33)
$2,661
If recognized, the net amount of potential tax benefits that would impact the company’s effective
tax rate is $5.2 billion in 2021 and $5.0 billion in 2020. Of the unrecognized tax benefits recorded in the
table above as of December 31, 2021, AbbVie would be indemnified for approximately $79 million.
The “Increase due to current year tax positions” and “Increase due to prior year tax positions” in the table
above include amounts related to federal, state and international tax items. “Increase due to acquisition”
in the table above includes amounts related to federal, state and international tax items recorded in
acquisition accounting related to the Allergan acquisition.
AbbVie recognizes interest and penalties related to income tax matters in income tax expense in
the consolidated statements of earnings. AbbVie recognized gross income tax expense of $161 million
in 2021, $142 million in 2020 and $51 million in 2019, for interest and penalties related to income tax
matters. AbbVie had an accrual for the payment of gross interest and penalties of $803 million at
December 31, 2021, $642 million at December 31, 2020 and $191 million at December 31, 2019.
The company is routinely audited by the tax authorities in significant jurisdictions and a number of
audits are currently underway. It is reasonably possible during the next 12 months that uncertain tax
positions may be settled, which could result in a decrease in the gross amount of unrecognized tax
benefits. Due to the potential for resolution of federal, state and foreign examinations and the expiration
of various statutes of limitation, the company’s gross unrecognized tax benefits balance may change
within the next 12 months up to $225 million. All significant federal, state, local and international matters
have been concluded for years through 2008. The company believes adequate provision has been
made for all income tax uncertainties.
Note 15 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 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.
2021 Form 10-K |
97
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 violates 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 four individual plaintiff lawsuits and two consolidated purported class actions:
one brought by Niaspan direct purchasers and one brought by Niaspan end-payors. The cases are
pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or
consolidated pre-trial proceedings under the MDL Rules as In re: Niaspan Antitrust Litigation,
MDL No. 2460. In August 2019, the court certified a class of direct purchasers of Niaspan. In June 2020
and August 2021, the court denied the end-payors’ motion to certify a class. 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. In May 2020, Perrigo Company and
related entities filed a lawsuit against AbbVie and others in the United States District Court for the
Eastern District of Pennsylvania, alleging that Abbott’s 2011 AndroGel patent lawsuit filed against
Perrigo was sham litigation. In October 2020, the Perrigo lawsuit was transferred to the United States
District Court for New Jersey. In September 2021, the New Jersey court granted AbbVie’s motion for
judgment on the pleadings in the Perrigo lawsuit, dismissing it with prejudice. Perrigo has appealed
the dismissal.
Between March and May 2019, 12 putative class action lawsuits were filed in the United States
District Court for the Northern District of Illinois by indirect Humira purchasers, alleging that AbbVie’s
settlements with biosimilar manufacturers and AbbVie’s Humira patent portfolio violated state and federal
antitrust laws. The court consolidated these lawsuits as In re: Humira (Adalimumab) Antitrust Litigation.
In June 2020, the court dismissed the consolidated litigation with prejudice. The plaintiffs have
appealed the dismissal.
Lawsuits are pending against Forest Laboratories, LLC and others generally alleging that 2009 and
2010 patent litigation settlements involving Namenda entered into between Forest and generic companies
and other conduct by Forest involving Namenda, violated state antitrust, unfair and deceptive trade
practices, and unjust enrichment laws. Plaintiffs generally seek monetary damages, injunctive relief and
attorneys’ fees. The lawsuits, purported class actions filed by indirect purchasers of Namenda, are
consolidated as In re: Namenda Indirect Purchaser Antitrust Litigation in the United States District Court
for the Southern District of New York.
Lawsuits are pending against Allergan Inc. generally alleging that Allergan’s petitioning to the U.S.
Patent Office and Food and Drug Administration and other conduct by Allergan involving Restasis
violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust
enrichment laws. Plaintiffs generally seek monetary damages, injunctive relief and attorneys’ fees. The
lawsuits, certified as a class action filed on behalf of indirect purchasers of Restasis, are consolidated
for pre-trial purposes in the United States District Court for the Eastern District of New York under the
MDL Rules as In re: Restasis (Cyclosporine Ophthalmic Emulsion) Antitrust Litigation, MDL No. 2819.
In May 2021, the parties reached an agreement to settle this matter that is subject to final court approval.
Lawsuits are pending against Forest Laboratories, LLC and others generally alleging that 2012 and
2013 patent litigation settlements involving Bystolic with six generic manufacturers violated federal and
98
| 2021 Form 10-K
state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs
generally seek monetary damages, injunctive relief, and attorneys’ fees. The lawsuits, purported class
actions filed on behalf of direct and indirect purchasers of Bystolic, are consolidated as In re: Bystolic
Antitrust Litigation in the United States District Court for the Southern District of New York.
Government Proceedings
Lawsuits are pending against Allergan and several other manufacturers generally alleging that they
improperly promoted and sold prescription opioid products. Approximately 3,130 matters are pending
against Allergan. The federal court cases 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 251 of the claims are pending in various state courts. The
plaintiffs in these cases, 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. In December 2021, a California state court reached
a judgment for Allergan and other defendants in the trial of an opioid lawsuit by Orange, Los Angeles,
and Santa Clara Counties and the City of Oakland. In December 2021, Allergan reached an agreement
to settle a lawsuit brought by the State of New York and two New York counties, which also provides
all other New York counties and political subdivisions the opportunity to participate in the settlement.
In July 2019, the New Mexico Attorney General filed a lawsuit, State of New Mexico ex rel.
Balderas v. AbbVie Inc., et al., in New Mexico District Court for Santa Fe County against AbbVie and
other companies alleging their marketing of AndroGel violated New Mexico’s Unfair Practices Act. In
October 2020, the state added a claim under the New Mexico False Advertising Act.
Shareholder and Securities Litigation
In June 2016, a lawsuit, Elliott Associates, L.P., et al. v. AbbVie Inc., was filed by five investment
funds against AbbVie in the Cook County, Illinois Circuit Court alleging that AbbVie made
misrepresentations and omissions in connection with its proposed transaction with Shire. Similar
lawsuits were filed between July 2017 and October 2019 against AbbVie and in some instances its
chief executive officer in the same court by additional investment funds. The court granted motions
dismissing the claims of three investment-fund plaintiffs, which they appealed. In March 2021, in the first
of those appeals, the dismissal was affirmed. One of these plaintiffs refiled its lawsuit in New York
state court in June 2020 while the appeal of its dismissal in Illinois is pending. In November 2020, the
New York Supreme Court for the County of New York dismissed that lawsuit, which is being appealed. In
September 2021, the Illinois court granted AbbVie’s motion for summary judgment against all remaining
plaintiffs on all the remaining claims, dismissing them with prejudice. The plaintiffs have appealed
the dismissals.
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 2017 were misleading because they omitted alleged misconduct in connection
with Humira patient and reimbursement support services and other services and items of value that
allegedly induced Humira prescriptions. In September 2021, the court granted plaintiffs’ motion to certify
a class.
Lawsuits are pending against Allergan and certain of its current and former officers alleging they
made misrepresentations and omissions regarding Allergan’s textured breast implants. The lawsuits,
which were filed by Allergan shareholders, have been consolidated in the United States District Court for
the Southern District of New York as In re: Allergan plc Securities Litigation. The plaintiffs generally
seek compensatory damages and attorneys’ fees. In September 2019, the court partially granted
Allergan’s motion to dismiss. In September 2021, the court granted plaintiffs’ motion to certify a class.
Lawsuits are pending against Allergan and certain of its current and former officers alleging they
made misrepresentations and omissions regarding Allergan’s former Actavis generics unit and its alleged
anticompetitive conduct with other generic drug companies. The lawsuits were filed by Allergan
shareholders and consist of three purported class actions and one individual action that have been
2021 Form 10-K |
99
consolidated in the U.S. District Court for the District of New Jersey as In re: Allergan Generic Drug
Pricing Securities Litigation. In July 2021, the parties reached an agreement to settle the class action
lawsuits, which received court approval in November 2021.
Product Liability and General Litigation
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 seeks
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.
Intellectual Property Litigation
AbbVie Inc. and AbbVie Biotechnology Ltd are seeking to enforce their patent rights relating to
adalimumab (a drug AbbVie sells under the trademark Humira). In April 2021 and May 2021, cases
were filed in the United States District Court for the Northern District of Illinois against Alvotech hf. AbbVie
alleges defendant’s proposed biosimilar adalimumab product infringes certain AbbVie patents and
seeks declaratory and injunctive relief. In August 2021, the court denied Defendant’s motion to dismiss
on jurisdictional grounds in the first case; a motion in the second case remains pending. The court
has set a trial on a subset of patents for August 2022. The court order provides that Alvotech will stay
off the market until that decision. Litigation on the remaining patents is stayed. In October 2021, the
May 2021 declaratory judgment action filed by Alvotech hf. and its U.S. subsidiary Alvotech USA, Inc.
in the United States Eastern District of Virginia was transferred to the Northern District of Illinois and
subsequently dismissed.
Pharmacyclics LLC, a wholly owned subsidiary of AbbVie, is seeking to enforce its patent rights
relating to ibrutinib tablets (a drug Pharmacyclics sells under the trademark Imbruvica). Cases were
filed in the United States District Court for the District of Delaware in March 2019 against Alvogen Pine
Brook LLC and Natco Pharma Ltd.. In August 2021, the court issued a decision holding all asserted
patents infringed and valid. The judgment precludes Defendants from obtaining regulatory approval and
launching until the last patent expires in 2036. Janssen Biotech, Inc. which is in a global collaboration
with Pharmacyclics concerning the development and marketing of Imbruvica, is the co-plaintiff in these
suits.
Allergan USA, Inc., Allergan Sales, LLC, and Forest Laboratories Holdings Limited, wholly owned
subsidiaries of AbbVie, are seeking to enforce patent rights relating to cariprazine (a drug sold under
the trademark Vraylar). Litigation was filed in the United States District Court for the District of Delaware
in December 2019 against Sun Pharmaceutical Industries Limited and Sun Pharma Global FZE;
Aurobindo Pharma Limited and Aurobindo Pharma USA, Inc.; and Zydus Pharmaceuticals (USA), Inc.
and Cadila Healthcare Limited. Allergan alleges defendants’ proposed generic cariprazine products
infringe certain patents and seeks declaratory and injunctive relief. Gedeon Richter Plc, Inc. which is
in a global collaboration with Allergan concerning the development and marketing of Vraylar, is the
co-plaintiff in this suit.
Note 16 Segment and Geographic Area 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
100
| 2021 Form 10-K
regularly reviewed by the CODM for purposes of assessing performance, allocating resources and
planning and forecasting future periods.
Substantially all of AbbVie’s net revenues in the United States are to three wholesalers. Outside
the United States, products are sold primarily to health care providers or through distributors, depending
on the market served. The following tables detail AbbVie’s worldwide net revenues:
years ended December 31 (in millions)
Immunology
Humira
Skyrizi
Rinvoq
Hematologic Oncology
Imbruvica
Venclexta
Aesthetics
Botox Cosmetic(a)
Juvederm Collection(a)
Other Aesthetics(a)
Neuroscience
Botox Therapeutic(a)
Vraylar(a)
Duodopa
Ubrelvy(a)
Other Neuroscience(a)
Eye Care
Lumigan/Ganfort(a)
United States
International
Total
United States
International
Total
United States
International
Total
United States
Collaboration revenues
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
United States
International
Total
United States
United States
International
Total
United States
International
Total
2021
2020
2019
$17,330
3,364
$20,694
$ 2,486
453
$ 2,939
$ 1,271
380
$ 1,651
$ 4,321
1,087
$ 5,408
934
$
886
$ 1,820
$ 1,424
808
$ 2,232
658
$
877
$ 1,535
$ 1,268
198
$ 1,466
$ 2,012
439
$ 2,451
$ 1,728
102
$
409
511
552
667
18
685
$
$
$
$
$16,112
3,720
$19,832
$ 1,385
205
$ 1,590
653
$
78
731
$
$ 4,305
1,009
$ 5,314
804
$
533
$ 1,337
$
687
425
$ 1,112
318
$
400
718
666
94
760
$
$
$
$ 1,155
232
$ 1,387
951
$
103
$
391
494
125
528
11
539
$
$
$
$
$
$
273
306
579
$
$
165
213
378
2021 Form 10-K |
$14,864
4,305
$19,169
311
$
44
355
47
—
47
$
$
$
$ 3,830
844
$ 4,674
521
$
271
792
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
—
97
364
461
—
—
—
—
—
—
—
101
years ended December 31 (in millions)
Alphagan/Combigan(a)
Restasis(a)
Other Eye Care(a)
Women’s Health
Lo Loestrin(a)
Orilissa/Oriahnn
Other Women’s Health(a)
Other Key Products
Mavyret
Creon
Lupron
Linzess/Constella(a)
Synthroid
All other
Total net revenues
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
International
Total
United States
United States
International
Total
United States
International
Total
United States
2021
2020
2019
$
373
156
$
529
$ 1,234
56
$ 1,290
523
$
646
$ 1,169
$
$
$
$
$
$
423
14
437
139
6
145
209
5
214
$
754
956
$ 1,710
$ 1,191
604
$
179
783
$
$ 1,006
32
$ 1,038
767
$
$ 2,673
$56,197
$
$
$
$
$
$
$
$
$
$
$
$
223
103
326
755
32
787
305
388
693
346
10
356
121
4
125
181
11
192
$
785
1,045
$ 1,830
$ 1,114
600
$
152
752
649
18
667
$
771
$
$ 2,923
$45,804
$
$
$
$
$
$
$
$
$
$
$
$
$
$
—
—
—
—
—
—
—
—
—
—
—
—
91
2
93
—
—
—
$ 1,473
1,420
$ 2,893
$ 1,041
720
$
167
887
—
—
—
$
786
$
$ 2,068
$33,266
$
$
(a) Net revenues include Allergan product revenues after the acquisition closing date of May 8, 2020.
102
| 2021 Form 10-K
Net revenues to external customers by geographic area, based on product shipment destination,
were as follows:
years ended December 31 (in millions)
United States
Canada
Germany
Japan
France
China
Australia
Spain
Italy
United Kingdom
Brazil
All other countries
Total net revenues
2021
$43,510
1,397
1,223
1,090
936
857
533
519
506
497
368
4,761
$56,197
2020
$34,879
1,159
1,049
1,198
797
471
527
453
379
509
406
3,977
$45,804
2019
$23,907
813
909
1,211
695
195
395
472
372
372
359
3,566
$33,266
Long-lived assets, primarily net property and equipment, by geographic area were as follows:
as of December 31 (in millions)
United States and Puerto Rico
Europe
All other
Total long-lived assets
2021
$3,369
1,400
341
$5,110
2020
$3,354
1,534
360
$5,248
Note 17 Fourth Quarter Financial Results (unaudited)
...................................................................................................................................................................................................................................
quarter ended December 31 (in millions except per share data)
Net revenues
Gross margin
Net earnings attributable to AbbVie Inc.
Basic earnings per share attributable to AbbVie Inc.
Diluted earnings per share attributable to AbbVie Inc.
Cash dividends declared per common share
2021
$14,886
10,566
4,044
$ 2.27
$ 2.26
$ 1.41
2021 Form 10-K |
103
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of AbbVie Inc. and subsidiaries
(the Company) as of December 31, 2021 and 2020, and the related consolidated statements of
earnings, comprehensive income, equity and cash flows for each of the three years in the period ended
December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In
our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2021 and 2020, and the results of its operations and its cash flows for each
of the three years in the period ended December 31, 2021, in conformity with U.S. generally accepted
accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our
report dated February 18, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on the Company’s financial statements based on our audits. We are a public
accounting firm registered with the PCAOB and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations
of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement, whether due to error or fraud. Our audits included performing
procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the
financial statements that were communicated or required to be communicated to the audit committee and
that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved
our especially challenging, subjective or complex judgments. The communication of critical audit matters
does not alter in any way our opinion on the financial statements, taken as a whole, and we are not,
by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
104
| 2021 Form 10-K
Description of the
Matter
How We Addressed
the Matter in Our
Audit
Sales rebate accruals for Medicaid, Medicare and managed care
programs
As discussed in Note 2 to the consolidated financial statements under the
caption “Revenue Recognition,” the Company established provisions for sales
rebates in the same period the related product is sold. At December 31, 2021,
the Company had $8,254 million in sales rebate accruals, a large portion of
which were for rebates provided to pharmacy benefit managers, state
government Medicaid programs, insurance companies that administer
Medicare drug plans and private entities for Medicaid, Medicare and managed
care programs. In order to establish these sales rebate accruals, the Company
estimated its rebates based upon the identification of the products subject to a
rebate, the applicable price and rebate terms and the estimated lag time
between the sale and payment of the rebate.
Auditing the Medicaid, Medicare and managed care sales rebate accruals was
complex and required significant auditor judgment because the accruals
consider multiple subjective and complex estimates and assumptions. These
estimates and assumptions included the estimated inventory in the distribution
channel, which impacts the lag time between the sale to the customer and
payment of the rebate, and the final payer related to product sales, which
impacts the applicable price and rebate terms. In deriving these estimates and
assumptions, the Company used both internal and external sources of
information to estimate product in the distribution channels, payer mix,
prescription volumes and historical experience. Management supplemented its
historical data analysis with qualitative adjustments based upon changes in
rebate trends, rebate programs and contract terms, legislative changes, or
other significant events which indicate a change in the reserve is appropriate.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s sales rebate accruals for
Medicaid, Medicare and managed care programs. This included testing
controls over management’s review of the significant assumptions and other
inputs used in the estimation of Medicaid, Medicare and managed care
rebates, among others, including the significant assumptions discussed above.
The testing was inclusive of management’s controls to evaluate the accuracy
of its reserve judgments to actual rebates paid, rebate validation and
processing, and controls to ensure that the data used to evaluate and support
the significant assumptions was complete, accurate and, where applicable,
verified to external data sources.
To test the sales rebate accruals for Medicaid, Medicare, and managed
care programs, our audit procedures included, among others, understanding
and evaluating the significant assumptions and underlying data used in
management’s calculations. Our testing of significant assumptions included
corroboration to external data sources. We evaluated the reasonableness
of assumptions considering industry and economic trends, product profiles,
and other regulatory factors. We assessed the historical accuracy of
management’s estimates by comparing actual activity to previous estimates
and performed analytical procedures, based on internal and external data
sources, to evaluate the completeness of the reserves. For Medicaid, we
involved a specialist with an understanding of statutory reimbursement
requirements to assess the consistency of the Company’s calculation
methodologies with applicable government regulations and policy.
2021 Form 10-K |
105
Description of the
Matter
How We Addressed
the Matter in Our
Audit
Valuation of contingent consideration
As discussed in Note 2 to the consolidated financial statements under the
caption “Business Combinations” and in Note 11 under the caption “Financial
Instruments and Fair Value Measures,” the Company recognized contingent
consideration liabilities at the estimated fair value on the acquisition date in
connection with applying the acquisition method of accounting for business
combinations. Subsequent changes to the fair value of the contingent
consideration liabilities were recorded within the consolidated statement of
earnings in the period of change. At December 31, 2021, the Company had
$14,887 million in contingent consideration liabilities, which represented a
‘Level 3’ fair value measurement in the fair value hierarchy due to the
significant unobservable inputs used in determining the fair value and the use
of management judgment about the assumptions market participants would
use in pricing the liabilities.
Auditing the valuation of contingent consideration liabilities was complex and
required significant auditor judgment due to the use of a Monte Carlo
simulation model and the high degree of subjectivity in evaluating certain
assumptions required to estimate the fair value of contingent royalty
payments. In particular, the fair value measurement was sensitive to the
significant assumptions underlying the estimated amount of future sales of the
acquired products. Management utilized its expertise within the industry,
including commercial dynamics, trends and utilization, as well as knowledge of
clinical development and regulatory approval processes to determine certain
of these assumptions.
We obtained an understanding, evaluated the design and tested the operating
effectiveness of controls over the Company’s contingent consideration
liabilities process including, among others, management’s process to establish
the significant assumptions and measure the liability. This included testing
controls over management’s review of the significant assumptions and other
inputs used in the determination of fair value. The testing was inclusive of key
management review controls to monitor and evaluate clinical development of
the acquired products and estimated future sales, and controls to ensure that
the data used to evaluate and support the significant assumptions was
complete, accurate and, where applicable, verified to external data sources.
To test the estimated fair value of contingent consideration liabilities, our audit
procedures included, among others, inspecting the terms of the executed
agreement, assessing the Monte Carlo simulation model used and testing the
key contractual inputs and significant assumptions discussed above. We
evaluated the assumptions and judgments considering observable industry
and economic trends and standards, external data sources and regulatory
factors. Estimated amounts of future sales were evaluated for reasonableness
in relation to internal and external analyses, clinical development progress and
timelines, probability of success benchmarks, and regulatory notices. Our
procedures included evaluating the data sources used by management in
determining its assumptions and, where necessary, included an evaluation of
available information that either corroborated or contradicted management’s
conclusions. We involved a valuation specialist to assess the Company’s
Monte Carlo simulation model and to perform corroborative fair value calculations.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2013.
Chicago, Illinois
February 18, 2022
106
| 2021 Form 10-K
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
...................................................................................................................................................................................................................................
None.
ITEM 9A. CONTROLS AND PROCEDURES
...................................................................................................................................................................................................................................
Disclosure Controls and Procedures; Internal Control Over Financial Reporting
Evaluation of disclosure controls and procedures. The Chief Executive Officer, Richard A.
Gonzalez, and the Chief Financial Officer, Robert A. Michael, evaluated the effectiveness of AbbVie’s
disclosure controls and procedures as of the end of the period covered by this report, and concluded that
AbbVie’s disclosure controls and procedures were effective to ensure that information AbbVie is
required to disclose in the reports that it files or submits with the Securities and Exchange Commission
under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within
the time periods specified in the Commission’s rules and forms, and to ensure that information required
to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of
1934 is accumulated and communicated to AbbVie’s management, including its principal executive
officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
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 December 31, 2021.
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.
Management’s annual report on internal control over financial reporting. Management of
AbbVie is responsible for establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. AbbVie’s
internal control over financial reporting is designed 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 in the United States. However, all internal
control systems, no matter how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to financial statement
preparation and reporting.
Management assessed the effectiveness of AbbVie’s internal control over financial reporting as of
December 31, 2021. In making this assessment, management used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-
Integrated Framework (2013 framework). Based on that assessment, management concluded that
AbbVie maintained effective internal control over financial reporting as of December 31, 2021, based on
the COSO criteria.
2021 Form 10-K |
107
The effectiveness of AbbVie’s internal control over financial reporting as of December 31, 2021
has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in
their attestation report below, which expresses an unqualified opinion on the effectiveness of AbbVie’s
internal control over financial reporting as of December 31, 2021.
Report of independent registered public accounting firm. The report of AbbVie’s independent
registered public accounting firm related to its assessment of the effectiveness of internal control over
financial reporting is included below.
108
| 2021 Form 10-K
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of AbbVie Inc.
Opinion on Internal Control over Financial Reporting
We have audited AbbVie Inc. and subsidiaries’ internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control—Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the
COSO criteria). In our opinion, AbbVie Inc. and subsidiaries (the Company) maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO
criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated balance sheets of AbbVie Inc. and subsidiaries as of
December 31, 2021 and 2020, and the related consolidated statements of earnings, comprehensive
income, equity and cash flows for each of the three years in the period ended December 31, 2021, and
the related notes and our report dated February 18, 2022 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included
in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on the Company’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations on Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed 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. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the
risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chicago, Illinois
February 18, 2022
2021 Form 10-K |
109
ITEM 9B. OTHER INFORMATION
...................................................................................................................................................................................................................................
None.
110
| 2021 Form 10-K
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
...................................................................................................................................................................................................................................
Incorporated herein by reference are “Information Concerning Director Nominees,” “The Board of
Directors and its Committees—Committees of the Board of Directors,” and “Procedure for
Recommendation and Nomination of Directors and Transaction of Business at Annual Meeting” to be
included in the 2022 AbbVie Inc. Proxy Statement. The 2022 Definitive Proxy Statement will be filed on
or about March 21, 2022. Also incorporated herein by reference is the text found in this Form 10-K
under the caption, “Information about Our Executive Officers.”
AbbVie’s code of business conduct requires all its business activities to be conducted in compliance
with all applicable laws, regulations and ethical principles and values. All directors, officers and employees
of AbbVie are required to read, understand and abide by the requirements of the code of business
conduct applicable to them. AbbVie’s code of business conduct is available in the corporate governance
section of AbbVie’s investor relations website at www.abbvieinvestor.com.
Any waiver of the code of business conduct for directors or executive officers may be made only by
AbbVie’s audit committee. AbbVie will disclose any amendment to, or waiver from, a provision of the code
of conduct for the principal executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions, on its website within four business days following the
date of the amendment or waiver. In addition, AbbVie will disclose any waiver from the code of business
conduct for the other executive officers and for directors on the website.
AbbVie has a chief ethics and compliance officer who reports to the Vice Chairman, External
Affairs and Chief Legal Officer and to the public policy committee. The chief ethics and compliance
officer is responsible for overseeing, administering and monitoring AbbVie’s compliance program.
ITEM 11. EXECUTIVE COMPENSATION
...................................................................................................................................................................................................................................
The material to be included in the 2022 AbbVie Inc. Proxy Statement under the headings “Director
Compensation,” “Executive Compensation,” and “Compensation Committee Report” is incorporated
herein by reference. The 2022 Definitive Proxy Statement will be filed on or about March 21, 2022.
2021 Form 10-K |
111
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
...................................................................................................................................................................................................................................
(a) Equity Compensation Plan Information.
The following table presents information as of December 31, 2021 about AbbVie’s equity
compensation plans under which AbbVie common stock has been authorized for issuance:
(a)
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights(1)
(b)
Weighted-
average exercise
price of
outstanding
options,
warrants and
rights(2)
(c)
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))(3)
Plan Category
Equity compensation plans approved by security
holders
27,264,327
$81.98
74,075,427
Equity compensation plans not approved by security
holders
Total
—
27,264,327
—
$81.98
—
74,075,427
(1) Includes 138,085 shares issuable under AbbVie’s Incentive Stock Program pursuant to awards
granted by Abbott and adjusted into AbbVie awards in connection with AbbVie’s separation
from Abbott.
(2) The weighted-average exercise price does not include outstanding restricted stock units,
restricted stock awards and performance shares that have no exercise price.
(3) Excludes shares issuable upon the exercise of stock options and pursuant to other rights
granted under the Stemcentrx 2011 Equity Incentive Plan, which was assumed by AbbVie upon
the consummation of its acquisition of Stemcentrx, Inc. As of December 31, 2021, 44,912
options remained outstanding under this plan. The options have a weighted-average exercise
price of $17.63. No further awards will be granted under this plan.
(b) Information Concerning Security Ownership.
Incorporated herein by reference is the material
under the heading “Securities Ownership—Securities Ownership of Executive Officers and Directors”
in the 2022 AbbVie Inc. Proxy Statement. The 2022 Definitive Proxy Statement will be filed on or
about March 21, 2022.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
...................................................................................................................................................................................................................................
The material to be included in the 2022 AbbVie Inc. Proxy Statement under the headings “The
Board of Directors and its Committees,” “Corporate Governance Materials,” and “Procedures for
Approval of Related Person Transactions” is incorporated herein by reference. The 2022 Definitive
Proxy Statement will be filed on or about March 21, 2022.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
...................................................................................................................................................................................................................................
The material to be included in the 2022 AbbVie Inc. Proxy Statement under the headings “Audit
Fees and Non-Audit Fees” and “Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of the Independent Registered Public Accounting Firm” is incorporated herein by
reference. The 2022 Definitive Proxy Statement will be filed on or about March 21, 2022.
112
| 2021 Form 10-K
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
...................................................................................................................................................................................................................................
(a) Documents filed as part of this Form 10-K.
(1) Financial Statements: See Item 8, “Financial Statements and Supplementary Data,” on page
48 hereof, for a list of financial statements.
(2) Financial Statement Schedules: All schedules omitted are inapplicable or the information
required is shown in the consolidated financial statements or notes thereto.
(3) Exhibits Required by Item 601 of Regulation S-K: The information called for by this paragraph
is set forth in Item 15(b) below.
(b) Exhibits:
Exhibit
Number
2.1
2.2
2.3
2.4
3.1
3.2
4.1
4.2
4.3
4.4
4.5
Exhibit Description
*Transaction Agreement, dated as of June 25, 2019, between AbbVie Inc., Allergan plc and
Venice Subsidiary, LLC (incorporated by reference to Exhibit 2.1 of the company’s Current
Report on Form 8-K filed on June 25, 2019).
*Appendix III to the Rule 2.5 Announcement, dated as of June 25, 2019 (Conditions
Appendix) (incorporated by reference to Exhibit 2.2 of the company’s Current Report on
Form 8-K filed on June 25, 2019).
*Expenses Reimbursement Agreement, dated as of June 25, 2019, between AbbVie Inc.
and Allergan plc (incorporated by reference to Exhibit 2.3 of the company’s Current Report
on Form 8-K filed on June 25, 2019).
*Amendment to the Transaction Agreement, dated as of May 5, 2020, between AbbVie Inc.,
Allergan plc and Venice Subsidiary, LLC (incorporated by reference to Exhibit 2.1 of the
company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020).
*Amended and Restated Certificate of Incorporation of AbbVie Inc. (incorporated by
reference to Exhibit 3.1 of the company’s Current Report on Form 8-K filed on January 2,
2013).
*Amended and Restated By-Laws of AbbVie Inc. (incorporated by reference to Exhibit 3.1 of
the company’s Current Report on Form 8-K filed on October 22, 2019).
Description of the company’s securities registered pursuant to Section 12 of the Securities
Exchange Act of 1934.
*Indenture dated as of November 8, 2012 between AbbVie Inc. and U.S. Bank National
Association (incorporated by reference to Exhibit 4.1 of Amendment No. 5 to the company’s
Registration Statement on Form 10 filed on November 16, 2012).
*Supplemental Indenture No. 1 dated as of November 8, 2012 among AbbVie Inc. and U.S.
Bank National Association, including forms of notes (incorporated by reference to
Exhibit 4.2 of Amendment No. 5 to the company’s Registration Statement on Form 10 filed
on November 16, 2012).
*Supplemental Indenture No. 2 dated May 14, 2015, between AbbVie Inc. and U.S. Bank
National Association, as trustee, including forms of notes (incorporated by reference to
Exhibit 4.1 of the company’s Current Report on Form 8-K filed on May 14, 2015).
*Supplemental Indenture No. 3 dated May 12, 2016, between AbbVie Inc. and U.S. Bank
National Association, as trustee, including forms of notes (incorporated by reference to
Exhibit 4.1 of the company’s Current Report on Form 8-K filed on May 12, 2016).
2021 Form 10-K |
113
Exhibit
Number
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
10.1
Exhibit Description
*Supplemental Indenture No. 4, dated as of November 17, 2016, among AbbVie Inc., U.S.
Bank National Association, as trustee, Elavon Financial Services DAC, U.K. Branch, as
paying agent and Elavon Financial Services DAC, as transfer agent and registrar, including
forms of notes (incorporated by reference to Exhibit 4.1 of the company’s Current Report on
Form 8-K filed on November 17, 2016).
*Supplemental Indenture No. 5, dated September 18, 2018, between AbbVie Inc. and U.S.
Bank National Association, as trustee, including forms of notes (incorporated by reference
to Exhibit 4.2 of the company’s Current Report on Form 8-K filed on September 18, 2018).
*Supplemental Indenture No. 6, dated September 26, 2019, among AbbVie Inc., U.S. Bank
National Association, as trustee, transfer agent and registrar, and Elavon Financial Services
DAC, UK Branch, as paying agent, including forms of notes (incorporated by reference to
Exhibit 4.2 of the company’s Current Report on Form 8-K filed on September 26, 2019).
*Supplemental Indenture No. 7, dated November 21, 2019, by and between AbbVie Inc. and
U.S. Bank National Association, as trustee, including forms of notes (incorporated by
reference to Exhibit 4.2 of the company’s Current Report on Form 8-K filed on
November 26, 2019).
*Supplemental Indenture No. 8, dated May 14, 2020, by and between AbbVie Inc. and U.S.
Bank National Association, as trustee (incorporated by reference to Exhibit 4.2 of the
company’s Current Report on Form 8-K filed on May 14, 2020).
*Supplemental Indenture No. 9, dated May 14, 2020, among AbbVie Inc., U.S. Bank and
National Association, as trustee, transfer agent and registrar, and Elavon Financial Services
DAC, U.K. Branch, as paying agent (incorporated by reference to Exhibit 4.15 of the
company’s Current Report on Form 8-K filed on May 14, 2020).
*Agency Agreement, dated as of November 17, 2016, among AbbVie Inc., U.S. Bank
National Association, as trustee, Elavon Financial Services DAC, U.K. Branch, as paying
agent and Elavon Financial Services DAC, as transfer agent and registrar (incorporated by
reference to Exhibit 4.2 of the company’s Current Report on Form 8-K filed on
November 17, 2016).
*Agency Agreement, dated September 26, 2019, among AbbVie Inc., U.S. Bank National
Association, as trustee, transfer agent and registrar, and Elavon Financial Services DAC,
U.K. Branch, as paying agent (incorporated by reference to Exhibit 4.3 of the company’s
Current Report on Form 8-K filed on September 26, 2019).
*Registration Rights Agreement, dated November 21, 2019, among AbbVie Inc. and Morgan
Stanley & Co. LLC, BofA Securities, Inc. and Barclays Capital Inc. (acting for themselves
and as representatives of the several initial purchasers) (incorporated by reference to
Exhibit 4.13 of the company’s Current Report on Form 8-K filed on November 26, 2019).
*Agency Agreement, dated May 14, 2020, among AbbVie Inc., U.S. Bank National
Association, as trustee, transfer agent and registrar, and Elavon Financial Services DAC,
U.K. Branch, as paying agent and calculation agent (incorporated by reference to
Exhibit 4.16 of the company’s Current Report on Form 8-K filed on May 14, 2020).
*Registration Rights Agreement, dated May 14, 2020, among AbbVie Inc. and Morgan
Stanley & Co. LLC, BofA Securities, Inc., Citigroup Global Markets Inc., BNP Paribas
Securities Corp., HSBC Securities (USA) Inc., Mizuho Securities USA LLC and Wells Fargo
Securities, LLC (incorporated by reference to Exhibit 4.23 of the company’s Current Report
on Form 8-K filed on May 14, 2020).
*Form of Agreement Regarding Change in Control by and between AbbVie Inc. and its
named executive officers (incorporated by reference to Exhibit 10.13 of Amendment No. 5 to
the Company’s Registration Statement on Form 10 filed on November 16, 2012).**
114
| 2021 Form 10-K
Exhibit
Number
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
10.19
Exhibit Description
*AbbVie 2013 Amended and Restated Incentive Stock Program (incorporated by reference
to Appendix C to the AbbVie Inc. Definitive Proxy Statement on Schedule 14A dated
March 22, 2021).**
AbbVie Performance Incentive Plan, as amended and restated.**
*AbbVie Deferred Compensation Plan, as amended and restated (incorporated by reference
to Exhibit 10.5 of the company’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2016).**
AbbVie Supplemental Pension Plan, as amended and restated.**
AbbVie Supplemental Savings Plan, as amended and restated. **
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.7 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2013).**
*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement
(incorporated by reference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2016).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2016).**
*Form of AbbVie Inc. Non-Employee Director Restricted Stock Unit Agreement
(incorporated by reference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q
for the quarterly period ended March 31, 2017).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2017).**
*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by
reference to Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2018).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2018).**
*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2019).**
*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated
by reference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2019).**
*AbbVie Non-Employee Directors’ Fee Plan, as amended and restated (incorporated by
reference to Exhibit 10.6 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2020).**
*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by
reference to Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2019).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2019).**
*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2020).**
2021 Form 10-K |
115
Exhibit
Number
10.20
10.21
10.22
10.23
10.24
10.25
10.26
10.27
10.28
10.29
10.30
10.31
10.32
21
23
31.1
Exhibit Description
*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated
by reference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2020).**
*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by
reference to Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2020).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2020).**
*Pharmacyclics, Inc. 2014 Equity Incentive Award Plan (incorporated by reference to
Exhibit 4.1 of the company’s Registration Statement on Form S-8 filed on May 27, 2015).**
*Amended and Restated Revolving Credit Agreement, dated as of August 27, 2019, among
AbbVie Inc., the lenders and other parties party thereto and JPMorgan Chase Bank, N.A.,
as administrative agent (incorporated by reference to Exhibit 10.1 of the company’s Current
Report on Form 8-K filed on August 30, 2019).
*364-Day Bridge Credit Agreement, dated as of June 25, 2019, among AbbVie Inc., Morgan
Stanley Senior Funding, Inc. and the lenders party thereto (incorporated by reference to
Exhibit 10.1 of the company’s Current Report on Form 8-K filed on June 25, 2019).
*Underwriting Agreement, dated September 17, 2019, among AbbVie Inc. and Morgan
Stanley & Co. International plc, HSBC Bank plc and Merrill Lynch International (acting for
themselves and as representatives of the several underwriters named therein) (incorporated
by reference to Exhibit 1.1 of the company’s Current Report on Form 8-K filed on
September 23, 2019).
*Purchase Agreement, dated November 12, 2019, among AbbVie Inc. and Morgan
Stanley & Co. LLC, BofA Securities, Inc. and Barclays Capital Inc. (acting for themselves
and as representatives of the several initial purchasers named therein) (incorporated by
reference to Exhibit 1.1 of the company’s Current Report on Form 8-K filed on
November 13, 2019).
*Form of AbbVie Inc. Performance-Vested Restricted Stock Unit Agreement (incorporated
by reference to Exhibit 10.1 of the company’s Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 2021). **
*Form of AbbVie Inc. Performance Share Award Agreement (incorporated by reference to
Exhibit 10.2 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021).**
*Form of AbbVie Inc. Non-Employee Director RSU Agreement (US) (incorporated by
reference to Exhibit 10.3 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2021).**
*Form of AbbVie Inc. Non-Qualified Stock Option Agreement (incorporated by reference to
Exhibit 10.4 of the company’s Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2021).**
*Form of AbbVie Inc. Retention RSU Agreement—Ratable Vesting (incorporated by
reference to Exhibit 10.5 of the company’s Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 2021).**
Subsidiaries of AbbVie Inc.
Consent of Independent Registered Public Accounting Firm.
Certification of Chief Executive Officer Required by Rule 13a-14(a)
(17 CFR 240.13a-14(a)).
31.2
Certification of Chief Financial Officer Required by Rule 13a-14(a) (17 CFR 240.13a-14(a)).
116
| 2021 Form 10-K
Exhibit
Number
32.1
32.2
101
Exhibit Description
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
The following financial statements and notes from the AbbVie Inc. Annual Report on
Form 10-K for the year ended December 31, 2021 filed on February 18, 2022, formatted in
Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of
Earnings; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated
Balance Sheets; (iv) Consolidated Statements of Equity; (v) Consolidated Statements of
Cash Flows; and (vi) the Notes to Consolidated Financial Statements.
104
Cover Page Interactive Data File (the cover page from the AbbVie Inc. Annual Report on
Form 10-K formatted as Inline XBRL and contained in Exhibit 101).
The AbbVie Inc. 2021 Definitive Proxy Statement will be filed with the Securities and
Exchange Commission under separate cover on or about March 21, 2022.
*
Incorporated herein by reference. Commission file number 001-35565.
** Denotes management contract or compensatory plan or arrangement required to be filed as an
exhibit hereto.
Exhibits 32.1 and 32.2, above, are furnished herewith and should not be deemed to be “filed” under
the Securities Exchange Act of 1934. AbbVie will furnish copies of any of the above exhibits to a
stockholder upon written request to the Secretary, AbbVie Inc., 1 North Waukegan Road, North Chicago,
Illinois 60064.
2021 Form 10-K |
117
ITEM 16. FORM 10-K SUMMARY
...................................................................................................................................................................................................................................
None.
118
| 2021 Form 10-K
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
AbbVie Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIGNATURES
AbbVie Inc.
By: /s/ RICHARD A. GONZALEZ
Name: Richard A. Gonzalez
Title:
Chairman of the Board and
Chief Executive Officer
Date: February 18, 2022
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of AbbVie Inc. on February 18, 2022 in the capacities indicated
below.
/s/ RICHARD A. GONZALEZ
Richard A. Gonzalez
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
/s/ BRIAN L. DURKIN
Brian L. Durkin
Vice President, Controller
(Principal Accounting Officer)
/s/ ROBERT J. ALPERN, M.D.
Robert J. Alpern, M.D.
Director of AbbVie Inc.
/s/ WILLIAM H.L. BURNSIDE
William H.L. Burnside
Director of AbbVie Inc.
/s/ BRETT J. HART
Brett J. Hart
Director of AbbVie Inc.
/s/ MELODY B. MEYER
Melody B. Meyer
Director of AbbVie Inc.
/s/ REBECCA B. ROBERTS
Rebecca B. Roberts
Director of AbbVie Inc.
/s/ FREDERICK H. WADDELL
Frederick H. Waddell
Director of AbbVie Inc.
/s/ ROBERT A. MICHAEL
Robert A. Michael
Vice Chairman, Finance and
Commercial Operations and
Chief Financial Officer
(Principal Financial Officer)
/s/ ROXANNE S. AUSTIN
Roxanne S. Austin
Director of AbbVie Inc.
/s/ THOMAS C. FREYMAN
Thomas C. Freyman
Director of AbbVie Inc.
/s/ EDWARD M. LIDDY
Edward M. Liddy
Director of AbbVie Inc.
/s/ EDWARD J. RAPP
Edward J. Rapp
Director of AbbVie Inc.
/s/ GLENN F. TILTON
Glenn F. Tilton
Director of AbbVie Inc.
2021 Form 10-K |
119
(This page has been left blank intentionally.)
Notice of 2022
Annual Meeting
of Stockholders
To the stockholders of our company:
You are cordially invited to attend the 2022 Annual Meeting of Stockholders to be held on May 6, 2022, where we will be
voting on the below matters. You will be able to attend the Annual Meeting, vote, and submit questions via live webcast by
visiting www.virtualshareholdermeeting.com/ABBV2022.
Items of business
• To elect four directors to hold office until the 2025 Annual Meeting or until their successors are elected.
• To ratify the appointment of Ernst & Young LLP as AbbVie’s independent registered public accounting firm for
2022.
• To vote on an advisory basis on the approval of executive compensation.
• To vote on a management proposal to eliminate supermajority voting.
• To consider any other matters that may properly come before the meeting, including four stockholder proposals, if
presented during the meeting.
Your vote is important.
Please vote promptly using one of
the methods mentioned below:
The Annual Meeting of Stockholders of AbbVie Inc. (the “Annual Meeting”) will be
held on Friday, May 6, 2022 at 9:00 a.m. CT. This year’s Annual Meeting will be a
virtual meeting of stockholders.
DATE AND TIME:
Friday, May 6, 2022
9:00 a.m. CT
WHERE:
Via live webcast online at
www.virtualshareholdermeeting.com/ABBV2022.
ADMISSION:
Stockholders of record at
the close of business on
March 7, 2022 are entitled
to notice of and to vote at
the annual meeting.
Thank you for your continued support of and interest in the company.
By Order of the Board of Directors,
Laura J. Schumacher
Secretary
March 21, 2022
Internet
Visit www.proxyvote.com to vote online.
Mail
Sign and return your proxy card in the
enclosed envelope if you received a
printed version of the proxy card.
Telephone
Call toll-free 1-800-690-6903 in the U.S.
and Canada.
At the virtual meeting
To be admitted to the virtual meeting,
you must enter the control number found
on your proxy card, voting instructions
form, or notice you received.
TABLE OF CONTENTS
PROXY SUMMARY
About the Meeting
Who We Are
Our Business Performance
Our Governance Highlights
Our ESG Highlights
Executive Compensation Highlights
INFORMATION CONCERNING DIRECTOR
NOMINEES
THE BOARD OF DIRECTORS AND ITS
COMMITTEES
COMMUNICATING WITH THE BOARD OF
DIRECTORS
DIRECTOR COMPENSATION
SECURITIES OWNERSHIP
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Compensation Committee Report
Compensation Risk Assessment
Summary Compensation Table
2021 Grants of Plan-Based Awards
2021 Outstanding Equity Awards at Fiscal
Year End
2021 Option Exercises and Stock Vested
Potential Payments upon Termination or
Change in Control
RATIFICATION OF ERNST & YOUNG LLP
AS ABBVIE’S INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
1
1
2
3
6
8
12
13
20
26
27
29
31
31
49
49
51
54
56
58
62
65
AUDIT INFORMATION
Audit Fees and Non-Audit Fees
Policy on Audit Committee Pre-Approval
of Audit and Permissible Non-Audit
Services of the Independent Registered
Public Accounting Firm
Audit Committee Report
SAY ON PAY—ADVISORY VOTE ON THE
APPROVAL OF EXECUTIVE
COMPENSATION
MANAGEMENT PROPOSAL TO ELIMINATE
SUPERMAJORITY VOTING
STOCKHOLDER PROPOSALS
Stockholder Proposal on Independent
Chair
Stockholder Proposal on Termination Pay
Stockholder Proposal on Report on Board
Oversight of Competition Practices
Stockholder Proposal on Political
Spending
ADDITIONAL INFORMATION
INFORMATION ABOUT THE ANNUAL
MEETING
Who Can Vote
Notice and Access
Voting by Proxy
Revoking a Proxy
Discretionary Voting Authority
Quorum and Vote Required to Approve
Each Item on the Proxy
Effect of Broker Non-Votes and
Abstentions
Inspectors of Election
Cost of Soliciting Proxies
AbbVie Savings Plan
66
66
66
67
68
69
71
71
73
75
77
80
84
84
84
84
84
84
84
85
85
85
85
PROXY SUMMARY
About the Meeting
The accompanying proxy is solicited on behalf
of the Board of Directors for use at the Annual
Meeting of Stockholders. This summary
highlights selected information in the proxy
statement. Please review the entire proxy
statement and the AbbVie 2021 Annual Report
before voting. The voting items expected to be
proposed at the meeting are listed below along
with the board’s voting recommendations.
2022 Annual Meeting of Stockholders Information
Date and Time: Friday, May 6, 2022 at 9:00 a.m. CT
Place: Via live webcast online at
www.virtualshareholdermeeting.com/ABBV2022
Record Date: March 7, 2022
Proposal 1: Election of Directors
Brett J. Hart
Edward J. Rapp
William H.L. Burnside
Thomas C. Freyman
Each of the nominees has the skills and experience necessary to fulfill his or her oversight role
with respect to AbbVie’s business and culture. See pages 14-19 for more information about the
qualifications of our directors.
FOR
Each Nominee
Proposal 2: Ratification of Independent Auditor
Ernst & Young LLP has served as our independent auditor since 2013. The board and the audit
committee believe it is in the best interests of the company and its stockholders to retain Ernst &
Young LLP as the company’s independent auditor. See page 65 for more information.
Proposal 3: Say on Pay – Advisory Vote on Executive Compensation
AbbVie’s compensation program aligns executive interests with the drivers of long-term,
sustainable growth. Our program balances short- and long-term strategic objectives and directly
links compensation to stockholder value. See pages 31-64 for more information.
Proposal 4: Management Proposal to Eliminate Supermajority Voting
AbbVie is again seeking stockholder approval to eliminate supermajority voting thresholds in
our charter and by-laws. See pages 69-70 for more information.
FOR
FOR
FOR
Stockholder Proposals
Proposal 5: Stockholder Proposal on Independent Chair
Proposal 6: Stockholder Proposal on Termination Pay
AGAINST
AGAINST
Proposal 7: Stockholder Proposal on Report on Board Oversight of Competition Practices AGAINST
Proposal 8: Stockholder Proposal on Political Spending
AGAINST
2022 Proxy Statement |
1
PROXY SUMMARY
Who We Are
In more than 70 countries, AbbVie employees are working every
day to advance health solutions for people around the world.
AbbVie is a global, research-based biopharmaceutical company. 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.
At AbbVie, we care deeply for patients and customers, their families, our employees,
and our communities. Our products and pipeline help us make a remarkable impact
on our stakeholders and beyond. Our products help patients in over 175 countries
around the world.
On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan). The
acquisition of Allergan created a diversified biopharmaceutical company positioned
for success with a comprehensive product portfolio that has leadership positions in
key therapeutic areas of immunology, hematologic oncology, aesthetics,
neuroscience, and eye care.
Since our inception as an independent company in 2013, we have invested over
$50 billion in research and development. At AbbVie, research and development
centers around the patient, from understanding disease biology to treatment delivery,
clinical trials, and beyond. We combine our experience pioneering scientific
breakthroughs, the best ideas in science, and advanced technologies to develop the
next generation of medicines.
Globally, our employees represent diverse backgrounds and perspectives, and our
company values treating everyone equally, with dignity and respect, which we
believe allows us to achieve our best. We proudly do our part to serve and support
our communities and protect the environment to make a lasting impact on health
care and beyond.
~ 50,000
employees
worldwide
Launched in
2013
Millions
of patient lives
touched
AbbVie’s Principles are foundational:
Transforming
Lives
We inspire hope and
transform lives every
day. We make
decisions based on
our deep caring and
compassion for
people, delivering a
lasting impact to our
patients, their
families, our
employees and the
community.
Acting with
Integrity
We strive to
always do the
right thing. With
uncompromising
integrity at the
heart of
everything we do,
we pursue the
highest standards
in quality,
compliance,
safety and
performance.
Driving
Innovation
We innovate
relentlessly in
everything we do
to tackle unmet
needs. We invest
in the discovery
and development
of new medicines
and healthcare
approaches for a
healthier world.
Embracing
Diversity
& Inclusion
We treat everyone
equally, with dignity
and respect. Around
the world, our
employees embrace
diverse backgrounds
and perspectives,
which allows us all to
achieve our best.
Serving the
Community
We are proud to
serve and
support the
community and
do our part to
protect the
environment. We
make a
remarkable
impact that's felt
within healthcare
and beyond.
2
| 2022 Proxy Statement
PROXY SUMMARY
Our Business Performance
AbbVie has delivered robust financial results since our launch in 2013
14.7%
Adjusted net revenues
- compound annual growth rate (CAGR)*
474.7%
9 year total stockholder return
21
Major product or indication approvals
19.1%
annual growth rate*
Adjusted diluted earnings per share - compound
1,400 bps
Operating margin expansion, adjusted*
~$185BN
Increase in market capitalization
- added significant stockholder value
>250%
Increase in quarterly dividend
- raised quarterly dividend to $1.41 per share from
$0.40 per share at inception
~90
Active clinical development programs**
- focused on immunology, oncology, aesthetics,
neuroscience, and eye care
The measures set forth above were calculated as of December 31, 2021.
*Net revenues, diluted earnings per share, and operating margin are adjusted to exclude certain specified items and are non-GAAP measures,
which are reconciled in Appendix B.
**In development individually or under collaboration or license agreements
Adjusted Net Revenues*
Adjusted EPS*
$56.1
$45.8
)
N
B
$
(
$18.8
$19.9
$22.8
$32.7
$33.3
$28.2
$25.6
$5.60
$4.82
$4.29
$3.14
$3.32
$12.70
$10.56
$8.94
$7.91
2013
2014
2015
2016
2017
2018
2019
2020
2021
2013
2014
2015
2016
2017
2018
2019
2020
2021
*Net revenues and diluted earnings per share are adjusted for specified items, including the impact of intangible asset amortization, and are
non-GAAP measures, which are reconciled in Appendix B.
2022 Proxy Statement |
3
PROXY SUMMARY
Since its launch in 2013, AbbVie has demonstrated an outstanding track record,
consistently delivering top-tier results
AbbVie has delivered a strong compound annual
growth rate (CAGR) since inception on adjusted net
revenues and adjusted diluted earnings per share
(EPS), placing AbbVie in the top tier of its Health
Care Peer Group.
Additionally, AbbVie is committed to a robust return of
capital to stockholders with an increase of more than
250% in its quarterly dividend since 2013 as part of a
balanced and disciplined capital allocation program.
AbbVie’s total stockholder return (TSR) since
inception of 474.7% also places AbbVie in the top tier
of its Health Care Peer Group, and more than
175 percentage points above the Standard & Poor’s
500 Index and 285 percentage points above the
NYSE Arca Pharmaceutical Index over the same time
period.
Total stockholder return (TSR) since inception
474.7%
298.4%
189.9%
AbbVie
S&P 500
NYSE Arca Pharma Index
AbbVie Rankings* vs. Peer Group
% Revenue Growth
% Adjusted EPS Growth
2021
2nd place out of 10
3 Years
2nd place out of 10
5 Years
2nd place out of 10
2021
3rd place out of 10
3 Years
2nd place out of 10
5 Years
2nd place out of 10
Total Stockholder Return
Our Peer Group
2021
3rd place out of 10
3 Years
2nd place out of 10
5 Years
2nd place out of 10
4
| 2022 Proxy Statement
AbbVie’s peer group above includes:
Amgen, Inc.
Bristol-Myers Squibb Company
Eli Lilly and Company
Gilead Sciences, Inc.
GlaxoSmithKline plc
Johnson & Johnson
Merck & Company, Inc.
Novartis AG
Pfizer Inc.
*Rankings based on financial results as initially reported by
AbbVie and peers in each respective fiscal year and may not
be adjusted for the impact of mergers, acquisitions, and/or
divestitures.
AbbVie also delivered strong business performance in 2021*
PROXY SUMMARY
Net Revenues: AbbVie reported worldwide adjusted net revenues of $56.1 billion in 2021.
Worldwide net revenues increased by 23% on a reported basis, or 11% on a comparable
operational basis**, which included strong and balanced performance from immunology,
hematologic oncology, aesthetics, and neuroscience.
Gross and Operating Margins: In 2021, AbbVie reported a gross margin of 69.0% on a
GAAP basis or 83.2% of net revenues on an adjusted basis. AbbVie’s operating margin
was 31.9% on a GAAP basis or 50.3% of net revenues on an adjusted basis. The adjusted
operating margin reflects an improvement of 230 basis points versus 2020.
Earnings Per Share: For 2021, AbbVie reported full-year diluted EPS of $6.45 on a GAAP
basis and adjusted diluted EPS of $12.70, up 20.3%. For 2022, AbbVie provided a diluted
EPS guidance range of $9.26 to $9.46 on a GAAP basis and $14.00 to $14.20 on an
adjusted basis. The midpoint of the 2022 adjusted guidance represents growth of 11% over
2021, reflecting strong operating dynamics in the underlying business.
Regulatory Milestones: AbbVie also achieved a number of regulatory milestones in
markets worldwide for several key products, including regulatory approvals for Skyrizi for
the treatment of active psoriatic arthritis (PsA), Qulipta for the preventive treatment of
episodic migraine in adults, Vuity for the treatment of presbyopia, and Rinvoq in three
additional indications: for the treatment of adult patients with active psoriatic arthritis (PsA),
for the treatment of adult patients with active ankylosing spondylitis (AS), and for the
treatment of adults and adolescents with moderate to severe atopic dermatitis (AD).
AbbVie also submitted regulatory applications for an additional indication for Skyrizi for the
treatment of patients 16 years and older with moderate to severe Crohn’s Disease (CD), as
well as Rinvoq in two additional indications: for the treatment of adults with moderately to
severely active ulcerative colitis (UC) and for adults with non-radiographic axial
spondyloarthritis (nr-AxSpa).
Pipeline Development: With more than 50 programs in mid- and late-stage development,
AbbVie made significant pipeline advancements in 2021. In addition to several positive
Phase 3 readouts across multiple indications for Skyrizi and Rinvoq, AbbVie also reported
positive registration enabling data for Vraylar as an adjunctive treatment for patients with
major depressive disorder (MDD) and ABBV-951, a potentially transformative therapy for
patients with advanced Parkinson’s Disease. Several important Phase 3 programs are
ongoing in other areas of our pipeline, including studies for Venclexta in multiple myeloma
(MM) and myelodysplatic syndrome (MDS) and Navitoclax for mylefibrosis.
*Net revenues, adjusted gross and operating margins, and diluted earnings per share are adjusted for specified items and are non-GAAP
measures, which are reconciled in Appendix B.
**Comparable operational comparisons include full-period current year and prior year results for Allergan products, as if the acquisition closed
on January 1, 2020, and are presented at constant currency rates that reflect comparative local currency net revenues at the prior year’s
foreign exchange rates.
2022 Proxy Statement |
5
PROXY SUMMARY
Our Governance Highlights
Our board of directors is committed to strong corporate governance tailored to meet the needs of AbbVie and its
stockholders to enhance long-term stockholder value. Each year, AbbVie completes a robust investor
engagement program with governance investment teams. In 2021, we reached out to stockholders representing
nearly 40% of our outstanding shares. Our engagements in 2021 generally focused on (1) AbbVie’s business and
strategy, (2) AbbVie’s environmental, social, and governance (ESG) strategy and initiatives, (3) AbbVie’s equity,
equality, diversity, and inclusion programs and disclosures, (4) AbbVie’s disclosures related to its political
expenditures and lobbying activities, (5) AbbVie’s executive compensation programs, and (6) AbbVie’s board
composition and leadership structure, including the responsibilities of our lead independent director.
The board reviews feedback from these engagements and discusses opportunities to improve AbbVie’s
governance practices. The following chart summarizes some of the governance practices that the board has
adopted over the past several years as a result of dialogue with our stockholders:
Topic:
Actions taken by our board:
Stockholder
Voting Rights
approved a management proposal to eliminate supermajority voting in this proxy
statement (Item 4) to seek stockholder approval to amend the company’s Amended and
Restated Certificate of Incorporation to provide for a simple majority of shares
outstanding for all provisions previously subject to a supermajority provision, as
described in Item 4 and previously submitted the same proposal to stockholder vote
from 2018 to 2021 as well as a declassification management proposal to a stockholder
vote in 2016 to 2018
Proxy Access
approved and implemented in 2016 a proxy access by-law provision, as further
detailed in the company’s By-Laws
Lead Independent
Director Role
significantly expanded disclosure on the lead independent director
responsibilities in the 2019 and 2018 proxy statements, to better inform our
stockholders on the robust leadership that the role provides
appointed the lead independent director to all committees in 2019, further
strengthening his active leadership role
Board Skills
Disclosure
shared our board skills matrix beginning in 2016, which contains the skills
considered by the nominations and governance committee to be the most relevant to
the board’s oversight role with respect to AbbVie’s business and affairs and to drive our
culture of innovation and responsibility
Environmental,
Social, and
Governance (ESG)
Disclosures
enhanced our website disclosures on political contributions in 2022, including a
description of the process used to determine such contributions
expanded the discussion of board oversight of executive succession planning
and company culture in this proxy statement
disclosed detailed data on the diversity of AbbVie’s U.S. workforce by publishing
AbbVie’s EEO-1 report on our website starting in 2020
incorporated an overview of AbbVie’s ESG approach and initiatives in the proxy
statement beginning in 2018
expanded the description of AbbVie’s clawback policy, starting in the 2019 proxy
statement
added board diversity data, starting in the 2019 proxy statement, along with an
expanded discussion of the value of director diversity in the 2021 proxy statement
6
| 2022 Proxy Statement
Additional highlights of our governance practices include:
Director independence
Stockholder rights
Eleven of AbbVie’s twelve
directors are independent and
regularly meet in executive
session
Since our inception, we have
had a lead independent
director with robust
responsibilities
All members of our audit,
compensation, nominations
and governance, and public
policy committees are
independent
Adopted a proxy access By-
Law provision for 3%/3 years
We do not have a stockholder
rights plan or “poison pill”
Our directors are elected by a
majority vote of our
stockholders for uncontested
elections, and we have a
resignation policy if the
director fails to receive a
majority of the votes cast
Board composition and
effectiveness
Clawback and anti-hedging
and anti-pledging policies
Our governance guidelines
The Board has broad authority
restrict the number of boards
our directors may serve on to
prevent overboarding
Annual board and committee
self-assessments and annual
board succession planning
For inclusion on the board, the
nominations and governance
committee considers diversity
of race, ethnicity, gender, and
geography, together with other
voluntarily identified diversity
criteria
to recover incentive plan
awards
Directors and executive
officers are prohibited from
buying or selling any financial
instruments designed to
hedge or offset any decrease
in the market value of AbbVie
equity securities they hold
Directors and executive
officers are prohibited from
pledging AbbVie stock as
collateral for a loan
PROXY SUMMARY
Board and executive
accountability
Annual executive succession
planning, including an
assessment of the diversity of
executive candidates
Minimum stock ownership
guidelines are in place for the
CEO and other NEOs
We have a related person
transaction policy to ensure
appropriate oversight
We hold an annual say-on-pay
advisory vote on executive
compensation
Other ESG practices
All executives have ESG and
equity, equality, diversity, and
inclusion goals
We are guided by strong ethics
programs and supplier
guidelines
We disclose our corporate
political contributions, our trade
association memberships, and
oversight process on our
website and expanded these
disclosures in 2022
2022 Proxy Statement |
7
PROXY SUMMARY
Our ESG Highlights
Acting responsibly is ingrained in everything we do and is how we drive a long-term, sustainable business that
makes a genuine and lasting positive impact for patients, employees, and communities. During 2021, we
enhanced our environmental, social, and governance (ESG) framework and governance while continuing to take
meaningful action to deliver sustainable solutions that improve the health of our business and society.
Our ESG Framework
Our ESG Framework is built around three foundational pillars that align with our enterprise goals and principles.
These have been developed based on an analysis of our material issues, taking into account the topics of most
interest and relevance to our company and our stakeholders—including our patients and patient organizations,
employees, investors, regulators & government, payers & providers, suppliers, and nonprofit partners.
Collaboration with stakeholders is critical to our success—our goal is value creation through building engaging
and long-term relationships with all our partners and stakeholders. We engage in regular dialogue with a wide
variety of stakeholders to understand their evolving needs, interests, and expectations of AbbVie. From these
interactions, we develop our understanding of material drivers and identify additional opportunities to improve and
make an impact.
We discover and deliver
innovative medicines that solve
serious health issues and
enhance people’s lives by
pushing the boundaries of
innovation, putting people and
patients first, creating high-
quality therapeutic solutions and
ensuring their safety, efficacy,
and accessibility.
We unlock the full potential of
diverse and talented teams—
and partners—to deliver today
and into the future. We do this
by attracting and retaining the
best talent, embracing diversity
of thought and through
collaboration. We know that
when we unlock the full potential
of our people and our partners,
we accelerate innovation,
enhance people’s lives, and
meet our business objectives.
We innovate with integrity and
intention to advance long-term
patient health and business
resiliency. We ensure that we
are prepared for the future by
operating a sustainable, agile
business model and governance
structure that anticipates and
evolves in a dynamic industry and
society. We are unwavering in
assuring supply of innovative
medicines to patients and life
enhancing products to customers.
Our Material Drivers
Product Innovation
We strive to make a remarkable
impact on patients and drive
sustainable growth by consistently
discovering and delivering
innovative medicines that address
serious health issues and advance
people’s lives.
Patient Access and Patient
Affordability
We believe everyone who needs
our medicines should be able to get
them.
Human Capital Management
We believe purposeful work drives
meaningful change. We nurture
diverse talents to solve the most
complex health challenges and
create remarkable impacts on
people’s lives.
Business Ethics
We act with integrity in everything we
do.
Patient Health and
Engagement
We continuously strive to
improve health outcomes for
patients around the world.
Product Quality and Safety
We are committed to delivering
safe and effective, quality
products and medicines through
robust quality systems.
8
| 2022 Proxy Statement
PROXY SUMMARY
We also prioritize environmental sustainability within and beyond AbbVie to support our patients, people and
planet. Our environmental sustainability strategy is focused on reducing our environmental footprint, growing
sustainably through inspiring innovation, and engaging our workforce to steward sustainability.
Our ESG Governance
We took action in 2021 to enhance our ESG oversight and governance. To further strategic, enterprise-aligned
delivery on AbbVie’s ESG Framework, we established an ESG Council, chaired by our Vice Chairman, External
Affairs and Chief Legal Officer and composed of senior-level leaders from across the company. The ESG
Council’s purpose is to champion business sustainability and mitigate business risks by monitoring, reviewing,
and recommending actions to the ESG Council Chair, other members of the Executive Leadership Team, and
AbbVie’s CEO to advance AbbVie’s ESG framework and strategy. The ESG Council Chair may also present
certain recommendations of the ESG Council from time to time to the board of directors as appropriate.
The ESG Council meets quarterly, or more frequently if needed, and maintains sub-committees that are aligned to
AbbVie’s material drivers. With this governance in place, AbbVie is well-positioned to recognize ESG
opportunities and advance its ESG objectives.
ESG Action Report
We refined our previous Responsible Action Report to clearly align to AbbVie’s ESG Framework (our foundational
ESG pillars and material drivers). Published in June 2021, the newly titled 2020 ESG Action Report includes
detailed commentary about our approach, actions, and commitments across material drivers; 45 year-over-year-
KPIs showing our progress; and ESG-related recognitions of our efforts. The ESG Action Report outlines our
alignment with United Nations Sustainable Development Goals (SDGs) and the Sustainability Accounting
Standards Board (SASB) Index. The full ESG Action Report can be found at https://www.abbvie.com/societal-
impact.html.
In 2022, AbbVie will release its 2021 ESG Action Report containing updated disclosures, including those aligning
with the Task Force on Climate-Related Financial Disclosures (TCFD) framework, KPIs, and other information
related to our ESG efforts in 2021. Below are select 2021 ESG highlights across several of our material areas.
2022 Proxy Statement |
9
PROXY SUMMARY
Product Innovation
Patient Access and Patient
Human Capital Management
$6.5 billion in adjusted
research & development
spend in 2021*
21 major product or
indication approvals since
inception
Over 14,000 research hours
donated in 2021 to
neglected tropical diseases,
malaria and tuberculosis
Affordability
Expanded access to patients
who have difficulty paying for
their medicine by providing
medicine to more than
170,000 U.S. patients in
2021 at no cost through our
patient assistance program
Continued to advance our
Equity, Equality, Diversity &
Inclusion (EED&I) 5-year
strategy under the leadership
of our CEO, Chief Equity
Officer and Executive
Leadership Team
Completed 2021 Employee
Survey
Environmental Sustainability
Patient Health and
Business Ethics
Committed to joining the
Science-based Targets
Initiative (SBTi) by setting
ambitious science-based
emissions reduction targets
to support limiting global
temperature rise to no more
than 1.5 degrees Celsius
above pre-industrial levels.
We intend to formally
announce our SBTi-
approved science-based
targets in 2022, using 2021
as our baseline year
Engagement
To ensure that our clinical
trials reflect the populations
we serve, established
Director of Clinical Trial
Diversity and team as a key
lever to amplify this focus
Over $38 million in grants
and over 700,000 patients
and healthcare providers
reached through
independent education
grants in 2021
All employees received
AbbVie’s annual training on
our Code of Business
Conduct and conflicts of
interest training
Our Code of Business
Conduct is available in
31 languages
Employees in relevant
functions also received
mandatory training on topics
such as anti-corruption,
recognizing and reporting
safety information, product
promotion, and interactions
with healthcare providers and
patient groups
*Adjusted research and development spend is a non-GAAP measure, which is reconciled in Appendix B.
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| 2022 Proxy Statement
External Recognition as a Top Company
Our work hasn’t gone unnoticed. We’ve been honored to receive some of the most prestigious ratings and
recognitions in our industry. And we’ve received more than 40 Top Employer Great Place to Work and Top
Employer rankings globally. For more information, visit https://news.abbvie.com/media-resources/fact-
sheets/abbvie-ratings-and-recognition-fact-sheet.htm
PROXY SUMMARY
Business
Performance
FORTUNE
100
FORTUNE
World’s Most
Admired
Companies
Workplace & Diversity
Environmental, Social
Citizenship
and Governance
Dow Jones
Civic 50
Sustainability World
Index
Dow Jones
Sustainability North
America Index
Ecovadis Corporate
Social Responsibility
Assessment Gold
Medal
FTSE4GoodIndex
S&P 500 ESG Index
AbbVie ranked on
the 2021 Purpose
Power Index
3BL Media “100
Best Corporate
Citizens”
PEOPLE
Companies that
Care
Bioethics
International
Good Pharma
Scorecard for
clinical trial
transparency –
Tied for first
DiversityInc “Top
50 Companies for
Diversity” – Top 15
FORTUNE “100 Best
Companies to Work
For” – Included for
four consecutive
years
Great Place to Work
“World’s Best
Workplaces” –
Included for five
consecutive years
Human Rights
Campaign Corporate
Equality Index –
Scored 100% for six
consecutive years
Seramount “100 Best
Companies for
Working Mothers” –
Top 15 for four
consecutive years
2022 Proxy Statement |
11
PROXY SUMMARY
Executive Compensation Highlights
The compensation committee has designed and implemented an executive compensation program in which a
substantial majority of named executive officer (NEO) compensation at AbbVie is performance-based.
The goals of our compensation program are to:
1
Align executive
interests with the drivers
of stockholder returns and
profitable growth
2 Support achievement of
the company’s primary
business goals to have
a remarkable impact on
patients’ lives
3 Attract and retain
world-class executives
whose talents and
contributions sustain the
growth in long-term
stockholder value
When determining NEO compensation, the committee first considers the median of the competitive marketplace
(as derived primarily from the Health Care Peer Group approved by the committee) as an initial benchmark for
assessing compensation. The committee then takes into account the company’s overall performance against the
financial, operating and strategic objectives that were established at the start of the performance period. Finally,
specific pay determinations are made for each NEO based on his or her individual performance against goals and
contributions to the short- and long-term performance of the company.
Key components and design of our executive compensation program:
Three primary components make up AbbVie’s executive pay program: base salary, short-term incentives, and
long-term incentives. The structure of each component is tailored to serve a specific function and purpose. The
following is a summary of the key components of our compensation program.
Element
Type
Primary
Objective
Key Characteristics
Base Salary
Fixed
Attract & retain
top talent
Individual salaries are established relative to market median based
on each NEO’s individual performance, skills, experience, and
internal equity, as well as the company’s annual operating budget
Short-Term
Incentives
At-Risk
Encourage
achievement of
company’s
primary
business goals
Plan utilizes non-GAAP financial goals as well as an assessment
of individual performance against strategic objectives:
— Net revenues
— Income before taxes
— Operating margin
— Return on assets
— Strategic and leadership goals
Long-Term
Incentives
At-Risk
Align NEO
interests with
stockholders
Long-term incentive annual awards are granted in the form of:
— Performance shares and performance vested restricted stock
units (80% of NEO’s LTI award)
— Non-qualified stock options (20% of NEO’s LTI award)
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| 2022 Proxy Statement
INFORMATION CONCERNING DIRECTOR
NOMINEES
What am I voting on
and how should I
vote?
You are being asked to elect four Class I directors at the Annual Meeting.
The board of directors therefore recommends you vote “FOR” each
of the nominees set forth below.
The board of directors consists of three classes currently comprised of four directors in Class I, four directors in
Class II, and four directors in Class III. Directors of one class are elected each year for a term of three years. The
Class I directors are presented for re-election to hold office until the expiration of their term at the 2025 annual
meeting of stockholders and until their successors are elected and qualified or until their earlier death or
resignation. All of the nominees are currently serving as directors.
AbbVie’s governance guidelines provide that a director shall retire on the day of the annual stockholder meeting
following his or her 75th birthday; provided, however, that the full board may make exceptions from time to time
due to special circumstances. In late 2020, the board determined that Mr. Liddy, a Class II director, should
remain an additional year. Mr. Liddy will now retire as a director as of the 2022 annual stockholder meeting.
Directors are elected by stockholders if a majority of the votes cast are “for” a director’s re-election at the Annual
Meeting, excluding abstentions and broker non-votes. For more information on the director majority vote standard,
see AbbVie’s By-Laws as listed as an exhibit to AbbVie’s 2021 Annual Report on Form 10 - K.
2022 Proxy Statement |
13
INFORMATION CONCERNING DIRECTOR NOMINEES
Nominees (Class I)
William H.L. Burnside
Director Since: 2013
Age: 70
Committees: Audit and Nominations & Governance
Primary Occupation: Retired Senior Vice President and Director at The Boston
Consulting Group
Business Experience:
Mr. Burnside is a retired senior vice president and director at The Boston Consulting Group (BCG), where he
currently serves as an advisor. Prior to becoming managing partner of BCG’s Los Angeles office in 1987, he
worked in BCG’s London and Chicago offices, servicing clients in telecommunications, media, defense, financial
services, and manufacturing.
Key Contributions to the Board:
• Through his experience with The Boston Consulting Group, Mr. Burnside contributes knowledge and
understanding of corporate finance and capital markets matters to the board, as well as global and domestic
strategic advisory experience across a broad base of industries.
Thomas C. Freyman
Director Since: 2020
Age: 67
Committees: Audit and Compensation
Primary Occupation: Retired Executive Vice President, Finance and Administration,
Abbott Laboratories
Business Experience:
Mr. Freyman served as a director at Allergan from 2018 to 2020, when AbbVie acquired Allergan plc.
Mr. Freyman previously served as executive vice president, finance and administration at Abbott Laboratories
from 2015 until his retirement in 2017. He previously served at Abbott as chief financial officer and executive
vice president, finance and was first appointed chief financial officer and senior vice president, finance in 2001.
He also serves as a director of Tenneco Inc. and Hanger, Inc.
Key Contributions to the Board:
• Mr. Freyman’s extensive experience as a leader in the healthcare industry, knowledge of the Allergan
businesses, and expertise in complex accounting and financial issues provides the board with significant
global industry experience, continuity in oversight of the Allergan businesses, and finance and risk expertise.
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| 2022 Proxy Statement
INFORMATION CONCERNING DIRECTOR NOMINEES
Brett J. Hart
Director Since: 2016
Age: 52
Committees: Nominations & Governance and Public Policy
Primary Occupation: President, United Airlines Holdings, Inc.
Business Experience:
Mr. Hart is the president of United Airlines Holdings, Inc. (UAL) and United Airlines, Inc. He served as executive
vice president and chief administrative officer between March 2019 and May 2020, executive vice president,
chief administrative officer and general counsel between May 2017 and March 2019, and as executive vice
president and general counsel between February 2012 and May 2017. Mr. Hart also served as acting chief
executive officer of UAL and United Airlines, Inc. from October 2015 to March 2016. From December 2010 to
February 2012, he served as senior vice president, general counsel and secretary of UAL, United and
Continental. From June 2009 to December 2010, Mr. Hart served as executive vice president, general counsel
and corporate secretary at Sara Lee Corporation.
Key Contributions to the Board:
• As president and as executive vice president and general counsel for two large public companies with
international operations and having served as an acting CEO, Mr. Hart contributes operational and strategic
acumen with expertise in risk management, legal strategic matters, government and regulatory affairs,
customer and external facing matters, corporate governance, and compliance.
Edward J. Rapp
Director Since: 2013
Age: 64
Committees: Audit and Nominations & Governance
Primary Occupation: Retired Group President for Resource Industries of Caterpillar Inc.
Business Experience:
Mr. Rapp served as the Caterpillar Inc. group president for resource industries from 2014 until his retirement in
mid-2016. He previously served at Caterpillar as group president based in Singapore in 2013 and 2014 and as
the chief financial officer from 2010 to 2013, and he was named a group president in 2007. He also serves as a
director of Xos, Inc. He is currently a member of the University of Missouri College of Business Advisory Board.
Mr. Rapp previously served as a director of FM Global.
Key Contributions to the Board:
• As a result of his tenure as group president and chief financial officer at Caterpillar Inc., Mr. Rapp has
acquired management, operational, and financial expertise with extensive global experience and provides
the board with an informed perspective on financial and operational matters faced by a complex international
company.
2022 Proxy Statement |
15
INFORMATION CONCERNING DIRECTOR NOMINEES
Class II—Directors whose terms expire in 2023
Robert J. Alpern, M.D.
Director Since: 2013
Age: 71
Committees: Nominations & Governance and Public Policy
Primary Occupation: Ensign Professor of Medicine and Physiology, Professor of
Internal Medicine and Cellular and Molecular Physiology, and Former Dean of Yale
School of Medicine
Business Experience:
Dr. Alpern is Ensign Professor of Medicine and Physiology and Professor of Internal Medicine and Cellular and
Molecular Physiology at Yale School of Medicine. Dr. Alpern served as the Dean of Yale School of Medicine
and Ensign Professor of Medicine and Professor of Internal Medicine at Yale School of Medicine from June
2004 to January 2020. From July 1998 to May 2004, Dr. Alpern was the Dean of The University of Texas
Southwestern Medical Center. Dr. Alpern served on the board of Yale-New Haven Hospital from October 2005
to January 2020. Dr. Alpern also serves as a director of Abbott Laboratories and Tricida, Inc.
Key Contributions to the Board:
• Through his position as Ensign Professor of Medicine and Physiology, Professor of Internal Medicine and
Cellular and Molecular Physiology, as well as his previous service as Dean of Yale School of Medicine, Dean
of The University of Texas Southwestern Medical Center, and on the board of Yale-New Haven Hospital,
Dr. Alpern contributes valuable insights to the board through his medical and scientific expertise and his
knowledge of the health care environment and the scientific nature of AbbVie’s key research and
development initiatives.
Melody B. Meyer
Director Since: 2017
Age: 64
Committees: Audit and Public Policy
Primary Occupation: Retired President, Chevron Asia Pacific Exploration and
Production
Business Experience:
Ms. Meyer is president of Melody Meyer Energy, LLC, a private consulting firm, a position she has held since
June 2016. From March 2011 to April 2016, Ms. Meyer served as the president of Chevron Asia Pacific
Exploration and Production Company. She previously served as president of Chevron Energy Technology
Company from 2008 to 2011, in addition to various other roles over her thirty-seven year career at Chevron.
Ms. Meyer is also a director at bp p.I.c. and NOV, Inc.
Key Contributions to the Board:
• As a result of her tenure at Chevron, Ms. Meyer has acquired operational, management, strategic planning,
and financial expertise with extensive global experience and provides an informed perspective to the board
on financial and operational matters faced by a complex international company.
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| 2022 Proxy Statement
INFORMATION CONCERNING DIRECTOR NOMINEES
Frederick H. Waddell
Director Since: 2013
Age: 68
Committees: Audit and Compensation
Primary Occupation: Former Chairman of the Board and Chief Executive Officer of
Northern Trust Corporation and The Northern Trust Company
Business Experience:
Mr. Waddell served as chairman of the board of Northern Trust Corporation and The Northern Trust Company
from November 2009 until his retirement in January 2019. He previously served as chief executive officer from
2008 through 2017, as president from 2006 to 2011 and again from October to December 2016, and chief
operating officer from 2006 to 2008. Mr. Waddell is also a director of International Business Machines
Corporation.
Key Contributions to the Board:
• As former chairman and chief executive officer of Northern Trust Corporation and The Northern Trust
Company, Mr. Waddell contributes broad financial services experience with a strong record of leadership in
a highly regulated industry.
Class III—Directors whose terms expire in 2024
Roxanne S. Austin
Director Since: 2013
Age: 61
Committees: Compensation
Primary Occupation: President, Austin Investment Advisors
Business Experience:
Ms. Austin is president of Austin Investment Advisors, a private investment and consulting firm, and chairs the
U.S. Mid-market Investment Advisory Committee of EQT Partners. Previously, Ms. Austin also served as the
president and chief executive officer of Move Networks, Inc., a provider of Internet television services.
Ms. Austin served as president and chief operating officer of DIRECTV, Inc. Ms. Austin also served as executive
vice president and chief financial officer of Hughes Electronics Corporation and as a partner of Deloitte &
Touche LLP. Ms. Austin is also a director of Abbott Laboratories, Crowdstrike, Inc., Freshworks, Inc., and
Verizon Communications Inc. Ms. Austin has notified Abbott of her intent to resign from its Board of Directors at
the company’s next annual meeting of stockholders, currently planned for April 2022. Ms. Austin previously
served as a director of Teledyne Technologies, Inc, from 2006 to 2021, Target Corporation from 2002 to 2020,
and Telefonaktiebolaget LM Ericsson from 2008 to 2016.
Key Contributions to the Board:
• Through her extensive management and operating roles, including her financial roles, Ms. Austin contributes
significant oversight and leadership experience to the board, including financial expertise and knowledge of
financial statements, corporate finance, and accounting matters.
2022 Proxy Statement |
17
INFORMATION CONCERNING DIRECTOR NOMINEES
Richard A. Gonzalez
Director Since: 2013
Age: 68
Primary Occupation: Chairman of the Board and Chief Executive Officer, AbbVie Inc.
Business Experience:
Mr. Gonzalez is the chairman and chief executive officer of AbbVie, a position he has held since 2013. He
served as Abbott’s executive vice president of the pharmaceutical products group from July 2010 to
December 2012, and was responsible for Abbott’s worldwide pharmaceutical business, including commercial
operations, research and development, and manufacturing. He also served as president, Abbott Ventures Inc.,
Abbott’s medical technology investment arm, from 2009 to 2011. Mr. Gonzalez joined Abbott in 1977 and held
various management positions before briefly retiring in 2007, including: Abbott’s president and chief operating
officer; president, chief operating officer of Abbott’s Medical Products Group; senior vice president and
president of Abbott’s former Hospital Products Division; vice president and president of Abbott’s Health Systems
Division; and divisional vice president and general manager for Abbott’s Diagnostics Operations in the United
States and Canada.
Key Contributions to the Board:
• As a result of his service since 2013 as AbbVie’s chairman and chief executive officer and his more than
30- year career at Abbott, Mr. Gonzalez has developed valuable business, management, and leadership
experience, as well as extensive knowledge of AbbVie and its global operations.
• Mr. Gonzalez’s experience and knowledge enable him to contribute to AbbVie’s board key insights into
strategic, management, and operational matters.
Rebecca B. Roberts
Director Since: 2018
Age: 69
Committees: Nominations & Governance and Public Policy
Primary Occupation: Retired President of Chevron Pipe Line Company
Business Experience:
Ms. Roberts served as president of Chevron Pipe Line Company from 2006 until her retirement in 2011. She
previously served as the president of Chevron Global Power Generation from 2003 to 2006, in addition to
various technical and management positions during her thirty-six year career with Chevron. Ms. Roberts began
her career as a chemist and research scientist. Ms. Roberts currently serves on the board of directors at Black
Hills Corporation and MSA Safety Incorporated. Ms. Roberts served as a director of Enbridge, Inc. from 2015 to
2018.
Key Contributions to the Board:
• Ms. Roberts brings management, operational, safety, and strategy development expertise with a scientific
background and extensive global experience at Chevron.
• She provides an informed perspective to the board on regulatory and operational matters faced by a
complex international company.
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INFORMATION CONCERNING DIRECTOR NOMINEES
Glenn F. Tilton
Director Since: 2013
Age: 73
Committees: Audit, Compensation, Nominations & Governance, and Public Policy
Primary Occupation: Retired Chairman and Chief Executive Officer of the UAL
Corporation
Lead Independent Director
Business Experience:
Mr. Tilton was chairman of the Midwest for JPMorgan Chase & Co. from 2011 until his retirement in 2014. From
October 2010 to December 2012, Mr. Tilton also served as the non-executive chairman of the board of United
Continental Holdings, Inc. From September 2002 to October 2010, he served as chairman, president and chief
executive officer of UAL Corporation, and chairman and chief executive officer of United Air Lines, Inc., its
wholly owned subsidiary. Prior to becoming the vice chairman of Chevron Texaco following the merger of
Texaco Inc. and Chevron Corp., Mr. Tilton enjoyed a 30-year multi-disciplinary career with Texaco Inc.,
culminating in his election as chairman and chief executive officer. Mr. Tilton is also a director of Abbott
Laboratories and Phillips 66. Mr. Tilton also served on the board of directors of Lincoln National Corporation
from 2002 to 2007, of TXU Corporation from 2005 to 2007, of Corning Incorporated from 2010 to 2012, and of
United Continental Holdings, Inc. from 2010 to 2012.
Key Contributions to the Board:
• As chairman of the Midwest for JPMorgan Chase & Co. and having previously served as non - executive
chairman of the board of United Continental Holdings, Inc., and chairman, president, and chief executive
officer of UAL Corporation and United Air Lines, vice chairman of Chevron Texaco and as interim chairman
of Dynegy, Inc., Mr. Tilton acquired strong management experience overseeing complex multinational
businesses operating in highly regulated industries, as well as expertise in finance and capital markets
matters.
• His experience as non - executive chairman of the board of United Continental Holdings, Inc. also enhances
his contributions as AbbVie’s lead independent director.
2022 Proxy Statement |
19
THE BOARD OF DIRECTORS AND ITS COMMITTEES
The board of directors held nine meetings in 2021. All directors attended one-hundred percent of the board and
committee meetings in 2021. AbbVie encourages its board members to attend the annual stockholder meeting. All
of AbbVie’s directors attended the 2021 annual stockholder meeting.
The board has determined that each of the following individuals is independent in accordance with the New York
Stock Exchange (NYSE) listing standards: Dr. Alpern, Ms. Austin, Mr. Burnside, Mr. Freyman, Mr. Hart, Mr. Liddy,
Ms. Meyer, Mr. Rapp, Ms. Roberts, Mr. Tilton, and Mr. Waddell. To determine independence, the board applied
the AbbVie Inc. director independence guidelines. The board also considered whether a director has any other
material relationships with AbbVie or its subsidiaries and concluded that none of these directors had a relationship
that impaired the director’s independence. This included consideration of the fact that some of the directors are
officers or serve on boards of companies or entities to which AbbVie sold products or made contributions or from
which AbbVie purchased products and services during the year. This also included consideration of the fact that
some of the directors serve on the board of Abbott Laboratories (Abbott), AbbVie’s former parent. In making its
determination, the board relied on both information provided by the directors and information developed internally
by AbbVie.
The board has risk oversight responsibility for AbbVie and administers this responsibility both directly and with
assistance from its committees. The board reviews enterprise risks and discusses them with our senior
management on a regular basis. AbbVie’s risk management program focuses on issues relevant to AbbVie’s
business, reputation, and strategy, including but not limited to pipeline advancement, healthcare industry
dynamics such as pricing and patient access, manufacturing, regulatory and compliance matters, and others. The
board and its committees regularly review environmental, social, and governance (ESG) topics that are material
to AbbVie. For more details about committee responsibilities and oversight, please see the committee discussion
on pages 23-25.
Management succession planning is a key responsibility and area of focus for the board. The full board regularly
reviews both short- and long-term succession plans for the CEO and other executive officers. This review, for
which the lead independent director takes a leadership role, includes a discussion of the skillset needed for these
executive roles, the timeline for any potential executive transitions, the leadership pipeline and their development
plans, and the diversity of the leadership pipeline. Directors regularly interact with succession candidates. The
board also reviews its own succession planning, including for committee chairs and the lead independent director.
The board oversees AbbVie’s culture, employee engagement, and overall management of human capital. This
oversight ensures that AbbVie is attracting, developing, and retaining best in class employees dedicated to
making a remarkable impact on patients’ lives around the world. Examples of this oversight include (1) reviewing
results of the biennial all employee survey, which assesses topics like employee engagement, inclusion, agility in
processes, ethical decision making, and other issues critical to the company’s culture, (2) oversight of the
company’s equity, equality, diversity, and inclusion strategy, (3) oversight of employee health and safety data and
priorities, (4) reviewing the company’s commitment to pay equity and results from the equity analysis to ensure
this commitment is met, and (5) oversight of the company’s ESG strategy, including the human capital
management components. The board also interacts with employees at various levels of seniority, not solely on
the executive leadership team, which facilitates a better understanding of the company’s culture.
In 2021, the board continued to spend a significant amount of time overseeing the company’s ongoing responses
to the COVID-19 pandemic, including the impact on AbbVie’s employees and the availability of resources to
support employees’ health and well-being. The board also reviewed the pandemic’s impact on pipeline and
marketed products, as well as overall company strategy.
The board has determined that the current leadership structure, in which the offices of chairman of the board and
chief executive officer are held by one individual with a board appointed lead independent director, ensures the
appropriate level of oversight, independence, and responsibility is applied to all board decisions, including risk
oversight, and is in the best interests of AbbVie and its stockholders. The lead independent director is chosen by
and from the independent members of the board of directors. The board regularly reviews its leadership
structure, as well as feedback from stockholders on this topic.
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| 2022 Proxy Statement
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Our Lead Independent Director has robust and well-defined responsibilities that provide our board with
significant leadership and oversight:
leads the CEO succession planning process
facilitates communication with the board and
presides over regularly conducted executive
sessions of the independent directors or sessions
where the chairman of the board is not present
reviews and approves matters, such as schedule
sufficiency, and, where appropriate, information
provided to other board members
serves as the liaison between the chairman of the
board and the independent directors
has the authority to call meetings of the
independent directors
leads the board’s evaluation of the CEO
leads the annual board and committee evaluation
process, including discussing evaluations with
each director individually
reviews and guides agenda items for board
meetings
encourages effective director participation by
fostering an environment of open dialogue and
constructive feedback among independent
directors
involved in selection and interviewing of new
board members
if requested by major stockholders, ensures that
he or she is available for consultation and direct
communication as needed
if required, represents independent board
members externally
performs such other duties as the board may
determine from time to time
All directors are encouraged to, and in fact do, consult with the chairman on each of the above topics, as well.
The lead director, and each of the other directors, communicates regularly with the chairman of the board and
chief executive officer regarding appropriate agenda topics and other board related matters.
AbbVie directors have backgrounds that when combined provide a portfolio of experience and knowledge that
serve AbbVie’s governance and strategic needs. Director nominees are considered based on a range of criteria
including broad-based business knowledge and relationships, prominence and excellent reputations in their
primary fields of endeavor, as well as a global business perspective and commitment to good corporate
citizenship, and ability to commit sufficient time and attention to the activities of the board. They must have
demonstrated experience and ability that is relevant to the board’s oversight role with respect to AbbVie’s
business and affairs. They must also be able and willing to represent the stockholders’ economic interests and
satisfy their fiduciary duties to stockholders without conflicts of interest. For more details on director qualifications,
please see Exhibit A to AbbVie’s Governance Guidelines.
Each year, the board and its committees conduct detailed self-evaluations covering topics such as board and
committee leadership structure, composition and effectiveness, quality of board and committee materials and
discussions, priority agenda items, schedule sufficiency, and board processes. To ensure candid feedback, the
evaluations are anonymous. The full board, led by the lead independent director, discusses the evaluation reports
to determine what, if any, actions or improvements should be undertaken in the near-term and long-term. The
board, committee, and CEO evaluations are discussed in executive session to allow for additional candid
discussion. In 2020, AbbVie engaged an independent firm to review the board and committee self-evaluation
materials, in order to ensure the self-evaluation process reflects current best practices.
Each director’s biography includes the particular experience and qualifications that led the board to conclude that
the director should serve on the board. The directors’ biographies are in the section of this proxy statement
captioned “Information Concerning Director Nominees.”
The following table highlights our directors’ skills and experience. The skills identified below are considered by the
nominations and governance committee to be the most relevant to the board’s oversight role with respect to
AbbVie’s business and affairs and to drive our culture of innovation and responsibility. The specific importance of
each skill also is noted.
2022 Proxy Statement |
21
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Such skills include, among others:
Healthcare Industry
Relevant to an industry understanding and review of our business and
strategy for continued innovation.
Leadership
For a board that can successfully advise and oversee the company’s
business performance and represent stockholders’ interests.
Global Business and
Strategy
For oversight of a complex global organization like AbbVie to successfully
advise and oversee the strategic development and direction of the company.
Corporate Governance
and Public Company
Board
Ensuring directors have the background and knowledge to perform oversight
and governance roles.
Finance or Accounting
Enabling our directors to analyze our financial statements, oversee our capital
structure, and consider financial transactions.
Government Relations
and Regulatory
For an understanding of the complex regulatory and governmental
environment in which our business operates.
ALPERN AUSTIN BURNSIDE
FREYMAN
GONZALEZ HART LIDDY MEYER RAPP ROBERTS TILTON WADDELL
Healthcare
Industry
Leadership
Global
Business
& Strategy
Corporate
Governance &
Public
Company
Board
Finance or
Accounting
Government
Relations &
Regulatory
22
| 2022 Proxy Statement
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board Diversity
AbbVie is committed to diversity in its workforce and on its board of directors.
AbbVie serves patients in over 175 countries and across many different
diseases. A diverse workforce and a diverse board are critical to bringing
innovative new medicines to patients and to meeting their unique needs. In
particular, diverse perspectives strengthen the oversight of AbbVie’s
business.
25%
female board
members
17%
ethnically or
racially diverse
board members
Diversity, including diversity of race, ethnicity, gender, and age, is an integral factor in identifying prospective
directors. In the process of identifying nominees to serve as a member of the board of directors, the nominations
and governance committee considers the existing board’s diversity and assesses the effectiveness of the
recruitment process in achieving a diverse board. More details about our workforce diversity efforts are available
in the ‘‘Our ESG Highlights’’ section of this proxy statement.
Committees of the Board of Directors
Audit Committee
Members
Key Characteristics and Responsibilities
Meetings in 2021: 6
W. Burnside
T. Freyman
(Chair)
M. Meyer
E. Rapp
G. Tilton
F. Waddell
The audit committee is governed by a written charter. The charter sets forth the purposes of the audit
committee, identifies qualifications required for the audit committee members, and describes the
committee’s authority and responsibilities.
The audit committee assists the board of directors in fulfilling its oversight responsibility with respect
to AbbVie’s accounting and financial reporting practices and the audit process, the quality and
integrity of AbbVie’s financial statements, including a review of significant accounting policies, the
independent auditors’ qualifications, independence, and performance, the performance of AbbVie’s
internal audit function and internal auditors, certain areas of legal and regulatory compliance, and
enterprise risk management. The audit committee is directly responsible for the appointment, fees,
retention, and oversight of the work of AbbVie’s independent auditors.
Each of the members of the audit committee is financially literate, as required of audit committee
members by the NYSE, and the independence requirements set forth in Section 10A(m)(3) of the
Securities Exchange Act of 1934, as amended (the ‘‘Exchange Act’’).
The board of directors has determined that Mr. Freyman, the committee’s chairperson, is an ‘‘audit
committee financial expert.’’
2022 Proxy Statement |
23
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Compensation Committee
Members
Key Characteristics and Responsibilities
Meetings in 2021: 3
R. Austin
(Chair)
T. Freyman
E. Liddy
G. Tilton
F. Waddell
The compensation committee is governed by a written charter. The charter sets forth the purposes of
the compensation committee, identifies qualifications required for the compensation committee
members, and describes the committee’s authority and responsibilities.
This committee assists the board of directors in carrying out the board’s responsibilities relating to the
compensation of AbbVie’s executive officers and directors. The compensation committee annually
reviews the compensation paid to the directors and gives its recommendations to the full board
regarding both the amount of director compensation that should be paid and the allocation of that
compensation between equity-based awards and cash.
In recommending director compensation, the compensation committee takes into account director
fees paid by companies in AbbVie’s Health Care Peer Group and reviews any arrangement that could
be viewed as indirect director compensation. The processes and procedures used for the
consideration and determination of executive compensation are described in the ‘‘Compensation
Discussion and Analysis’’ section of this proxy statement.
The committee also reviews, approves, and administers the incentive compensation plans in which
the AbbVie executive officers participate and all of AbbVie’s equity-based plans. It may delegate the
responsibility to administer and make grants under these plans to management, except to the extent
that such delegation would be inconsistent with applicable law or regulations or with the listing rules of
the New York Stock Exchange.
The compensation committee has the sole authority, under its charter, to select, retain and/or
terminate independent advisors who may assist the committee in carrying out its responsibilities.
The compensation committee reviews and discusses with management and its independent
compensation advisor potential risks associated with AbbVie’s compensation policies and practices
as discussed in the ‘‘Compensation Risk Assessment’’ section of this proxy statement. Each member
of the committee qualifies as a ‘‘non-employee director’’ for purposes of Rule 16b-3 under the
Exchange Act and as an ‘‘outside director’’ for purposes of Internal Revenue Code Section 162(m).
The committee has engaged Compensation Advisory Partners (CAP) as its independent compensation
consultant. The independent compensation consultant provides counsel and advice to the committee on
executive and non-employee director compensation matters. CAP, and its principal, report directly to the chair of
the committee. The principal meets regularly, and as needed, with the committee in executive sessions, and has
direct access to the committee chair during and between meetings. The committee determines what variables it
will instruct CAP to consider, including: peer groups against which performance and pay should be examined,
metrics to be used in incentive plans to assess AbbVie’s performance, competitive short- and long-term incentive
practices in the marketplace, and compensation levels relative to market benchmarks. The committee negotiates
and approves all fees paid to CAP for these services. AbbVie did not engage CAP to perform any other services
during 2021.
Based on an assessment of internally developed information and information provided by CAP, the committee
has determined that its independent compensation advisor does not have a conflict of interest. A copy of the
compensation committee report is included in the ‘‘Compensation Committee Report’’ section of this proxy
statement.
24
| 2022 Proxy Statement
THE BOARD OF DIRECTORS AND ITS COMMITTEES
Nominations and Governance Committee
Members
Key Characteristics and Responsibilities
Meetings in 2021: 4
R. Alpern
W. Burnside
B. Hart
E. Rapp
(Chair)
R. Roberts
G. Tilton
The nominations and governance committee is governed by a written charter. The charter sets forth
the purposes of the nominations and governance committee, identifies qualifications required for the
nominations and governance committee members, and describes the committee’s authority and
responsibilities.
This committee assists the board of directors in identifying individuals qualified to become board
members and recommends to the board the nominees for election as directors at the next annual
meeting of stockholders, recommends to the board the persons to be elected as executive officers of
AbbVie, recommends to the board the corporate governance guidelines applicable to AbbVie,
oversees the evaluation of the board and management, and serves in an advisory capacity to the
board and the chairman of the board on matters of organization, management succession plans,
major changes in the organizational structure of AbbVie, and the conduct of board activities.
The process used by this committee to identify a nominee to serve as a member of the board of
directors depends on the qualities being sought, as described on pages 21-23.
From time to time, AbbVie engages an executive search firm to assist the committee in identifying
individuals qualified to be board members.
Public Policy Committee
Members
Key Characteristics and Responsibilities
Meetings in 2021: 4
R. Alpern
B. Hart
(Chair)
E. Liddy
M. Meyer
R. Roberts
G. Tilton
The public policy committee is governed by a written charter. The charter sets forth the purposes of
the public policy committee, identifies qualifications required for the public policy committee members,
and describes the committee’s authority and responsibilities.
This committee assists the board of directors in fulfilling its oversight responsibility with respect to
AbbVie’s public policy, certain areas of legal and regulatory compliance, governmental affairs,
healthcare compliance, social responsibility, and sustainability and environmental matters that affect
or could affect AbbVie.
Other topics within the committee’s purview include but are not limited to ethics and compliance
matters, government and regulatory trends relevant to AbbVie’s business, political contributions, and
corporate philanthropy.
Executive Committee
The executive committee members are Mr. Gonzalez, chair, Ms. Austin, Mr. Freyman, Mr. Hart, Mr. Liddy,
Mr. Rapp, and Mr. Tilton. This committee may exercise all of the authority of the board in the management of
AbbVie, except for matters expressly reserved by law for board action.
2022 Proxy Statement |
25
COMMUNICATING WITH THE BOARD OF DIRECTORS
Stockholders and other interested parties may communicate with the board of directors by writing a letter to the
chairman of the board, to the lead director, or to the independent directors c/o AbbVie Inc., 1 North Waukegan
Road, AP34, North Chicago, Illinois 60064, Attention: corporate secretary. The corporate secretary regularly
forwards to the addressee all letters other than mass mailings, advertisements, and other materials not relevant to
AbbVie’s business. In addition, directors regularly receive a log of all correspondence received by the company
that is addressed to a member of the board and may request any correspondence on that log.
26
| 2022 Proxy Statement
DIRECTOR COMPENSATION
AbbVie employees are not compensated for serving on the board or board committees. AbbVie’s non - employee
directors are compensated for their service under the AbbVie Non - Employee Directors’ Fee Plan and the AbbVie
Amended and Restated 2013 Incentive Stock Program. As described in “Committees of the Board of Directors—
Compensation Committee,” director compensation is reviewed annually by the compensation committee with the
independent compensation consultant, including a review of director compensation against AbbVie’s Health Care
Peer Group, and a recommendation is then provided to the full board.
The following table sets forth the non - employee directors’ 2021 compensation.
Fees
Earned or
Paid in Cash
Restricted
Stock Unit
Awards
($)(1)
($)(2)
115,000
140,583
121,000
129,583
135,000
123,333
121,000
141,000
115,000
171,000
121,000
194,904
194,904
194,904
194,904
194,904
194,904
194,904
194,904
194,904
194,904
194,904
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
Option
Awards
($)(3)
0
0
0
0
0
0
0
0
0
0
0
($)(4)
36,085
0
0
0
0
0
0
0
0
0
0
Name
R. Alpern
R. Austin
W. Burnside
T. Freyman
B. Hart
E. Liddy
M. Meyer
E. Rapp
R. Roberts
G. Tilton
F. Waddell
All Other
Compensation
($)(5)
Total
($)
370,989
360,487
340,904
349,487
354,904
318,237
340,904
360,904
334,904
392,055
340,904
25,000
25,000
25,000
25,000
25,000
0
25,000
25,000
25,000
26,151
25,000
(1) Under the Non - Employee Directors’ Fee Plan as in effect during 2021, non - employee directors earned
$115,000 per year for service as a director and $20,000 per year for service as a chair of a board committee,
other than the chair of the audit committee. The chair of the audit committee received $25,000 per year for
service as chair of that committee and the other members of the audit committee received $500 for each
month of service as a committee member. The lead director received $50,000 in 2021 for service in that role.
The non - employee director and committee fees are earned monthly for each calendar month or portion
thereof that the director holds the position, excluding the month in which the director is first elected to the
position.
Fees earned under the AbbVie Non - Employee Directors’ Fee Plan are, at the director’s election, paid in cash,
delivered in the form of vested non - qualified stock options (based on an independent appraisal of their fair
value), deferred until retirement (as an unfunded AbbVie obligation), or paid currently into an individual
grantor trust established by an eligible director. The distribution of deferred fees and amounts held in a
director’s grantor trust generally commences at the later of when the director reaches age 65 or upon
retirement from the board of directors. Fees deposited in a trust may be credited to a stock equivalent account
that earns the same return as if the fees were invested in AbbVie stock or to a guaranteed interest account. If
necessary, AbbVie contributes funds to a director’s trust so that as of year - end the stock equivalent account
balance (net of taxes) is not less than seventy - five percent of the market value of the related AbbVie common
stock at year end.
(2) The amounts in this column represent the aggregate grant date fair value of the restricted stock unit awards
granted during 2021, determined in accordance with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) Topic 718. AbbVie determines the grant date fair value of the
awards by multiplying the number of units granted by the average of the high and low market prices of one
share of AbbVie common stock on the award grant date.
In addition to the fees described in footnote (1), each non - employee director elected to or serving on the
board of directors on the day of the 2021 annual stockholder meeting received under the AbbVie Amended
2022 Proxy Statement |
27
DIRECTOR COMPENSATION
and Restated 2013 Incentive Stock Program vested restricted stock units with a target grant date value of
$195,000. In 2021, this equated to 1,681 restricted stock units (after rounding the award down to the nearest
whole unit), with a reportable value of $194,904. The non - employee directors receive cash payments equal to
the dividends paid on the shares covered by the units at the same rate as other stockholders, but do not
otherwise have access to the restricted stock units during their board service. Upon termination or retirement
from the board, death, or a change in control of the company, a non - employee director will receive one
common share for each restricted stock unit outstanding under the Incentive Stock Program.
The following AbbVie restricted stock units were outstanding as of December 31, 2021: R. Alpern, 30,121;
R. Austin, 37,784; W. Burnside, 21,562; T. Freyman, 4,014; B. Hart, 14,076; E. Liddy, 21,562; M. Meyer,
11,102; E. Rapp, 21,562; R. Roberts, 8,332; G. Tilton, 33,768; and F. Waddell, 21,562. These numbers
include, where applicable, AbbVie restricted stock units issued with respect to Abbott Laboratories restricted
stock units outstanding when AbbVie separated from Abbott on January 1, 2013.
(3) No AbbVie stock options were outstanding as of December 31, 2021.
(4) The totals in this column include reportable interest credited under the AbbVie Non - Employee Directors’ Fee
Plan during 2021.
(5) Charitable contributions made by AbbVie’s non - employee directors are eligible for a matching contribution (up
to $25,000 annually). For 2021 contributions, the AbbVie Foundation made charitable matching contributions
on behalf of the following AbbVie directors: R. Alpern, $25,000; R. Austin, $25,000; W. Burnside, $25,000;
T. Freyman, $25,000; B. Hart, $25,000; M. Meyer, $25,000; E. Rapp, $25,000; R. Roberts, $25,000;
G. Tilton, $25,000; and F. Waddell, $25,000. This column also includes reimbursement for certain taxes.
28
| 2022 Proxy Statement
SECURITIES OWNERSHIP
Securities Ownership of Executive Officers and Directors
The table below reflects the number of shares of AbbVie common stock beneficially owned as of January 31,
2022, by each director and director nominee, the chief executive officer, the chief financial officer, and the three
other most highly paid executive officers (NEOs), and by all directors and executive officers of AbbVie as a group.
It also reflects the number of stock equivalent units and restricted stock units held by non - employee directors
under the AbbVie Non - Employee Directors’ Fee Plan.
Name
R. Gonzalez
R. Alpern
R. Austin
W. Burnside
T. Freyman
B. Hart
E. Liddy
M. Meyer
E. Rapp
R. Roberts
G. Tilton
F. Waddell
R. Michael
L. Schumacher
M. Severino
J. Stewart
All directors and executive officers as a group(4)
Shares
Beneficially
Stock Options
Exercisable
within 60 days
Stock
Equivalent
Units
Owned(1)(2)(3) of January 31, 2022
406,012
30,121
49,284
21,562
129,237
14,076
26,683
11,102
37,551
8,332
46,518
23,562
37,877
197,098
103,252
48,442
1,500,479
610,724
0
0
0
0
0
0
0
0
0
0
0
176,768
312,592
579,801
164,606
1,844,491
0
8,210
0
0
0
0
28,024
0
21,434
0
35,217
0
0
0
0
0
92,885
(1) The table includes shares held in the executive officers’ accounts in the AbbVie Savings Plan as follows: all
executive officers as a group, 5,780. Each executive officer has shared voting power and sole investment
power with respect to the shares held in his or her account.
(2) The table includes restricted stock units held by the non - employee directors. The directors’ units are payable
in stock as described in footnote (2) to the Director Compensation table.
(3) The table includes shared voting and/or investment power over shares as follows: R. Gonzalez, 29,415;
T. Freyman, 7,882; G. Tilton, 350; and all directors and executive officers as a group, 137,560.
(4) The directors and executive officers as a group own less than one percent of the outstanding shares of
AbbVie.
Securities Ownership of Principal Stockholders
The table below reports the number of shares of AbbVie common stock beneficially owned as of December 31,
2021 by The Vanguard Group and BlackRock, Inc. (directly or through subsidiaries), respectively, the only
persons known to AbbVie to own beneficially more than 5% of AbbVie’s outstanding common stock. It is based on
information contained in Schedules 13G filed with the Securities and Exchange Commission by The Vanguard
Group on February 9, 2022 and by BlackRock, Inc. on February 3, 2022. The Vanguard Group reported that it
had sole voting power with respect to 0 shares, shared voting power with respect to 3,006,849 shares, sole
dispositive power with respect to 138,828,740 shares and shared dispositive power with respect to
7,483,329 shares. BlackRock, Inc. reported that it had sole voting power with respect to 111,064,229 shares,
shared voting power with respect to 0 shares, sole dispositive power with respect to 128,197,555 shares and
shared dispositive power with respect to 0 shares.
2022 Proxy Statement |
29
SECURITIES OWNERSHIP
Name and Address of Beneficial Owner
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
Shares Beneficially Owned Percent of Class
146,312,069
8.28 %
128,197,555
7.3 %
30
| 2022 Proxy Statement
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis (CD&A) describes the pay philosophy established for AbbVie's
named executive officers (NEOs), the design of our compensation programs, the process used to examine
performance in the context of executive pay decisions, and the performance goals and results for each NEO:
RICHARD A.
GONZALEZ
ROBERT A.
MICHAEL
LAURA J.
SCHUMACHER
MICHAEL E.
SEVERINO
JEFFREY R.
STEWART
Chairman of the Board
of Directors and Chief
Executive Officer
Vice Chairman,
Finance and
Commercial
Operations and Chief
Financial Officer
Vice Chairman,
External Affairs and
Chief Legal Officer
Vice Chairman and
President
Executive Vice
President, Chief
Commercial Officer
Although we describe our programs in the context of the NEOs, it is important to note that our programs generally
have broad eligibility and therefore in most cases apply to employee populations outside the NEO group as well.
The content of this section is organized according to the following.
EXECUTIVE SUMMARY
Compensation Philosophy
Business Overview
Business Performance Highlights
Components of our Compensation Program
2021 Performance Results
Stockholder Engagement
Compensation Program Governance Summary
32 COMPENSATION PLAN ELEMENTS
32 Base Salary
32 Short-Term Incentives
33
Long-Term Incentives
37 Benefits
37 Employment Agreements
39 Excise Tax Gross-Ups
40 Change in Control Agreements
EXECUTIVE COMPENSATION PROCESS
Commitment to Performance-Based Awards
Committee Process for Setting Total
Compensation
Compensation Benchmarking
Role of the Compensation Consultant
Compensation Risk Oversight
41 OTHER MATTERS
41 Stock Ownership Guidelines
41 Clawback Policy
41 Anti-Hedging and Anti-Pledging Policies
41
42
42
42
42
45
46
47
47
47
48
48
48
48
2022 Proxy Statement |
31
EXECUTIVE COMPENSATION
Executive Summary
COMPENSATION PHILOSOPHY
We believe that a well-designed compensation program should:
1
Align executive
interests with the
drivers of stockholder
returns and profitable
growth
2 Support achievement of
the company’s primary
business goals to have
a remarkable impact on
patients’ lives
3 Attract and retain
world-class
executives whose
talents and
contributions sustain
the growth in long-term
stockholder value
WHAT WE DO
WHAT WE DO NOT DO
We balance short- and long-term strategic
X We do not have employment agreements with
objectives and directly link compensation to
stockholder value.
any of our NEOs.
X We do not provide excise tax gross-ups on NEO
We tie more than three-fourths of our NEO
compensation.
compensation to performance.
We are committed to pay equity and conduct
pay equity analyses annually to ensure pay is
equitable across genders and ethnicities among
U.S. employees.
We have broad discretion to claw back incentive
awards in the unlikely event of a restatement of
earnings or material breach of the AbbVie Code
of Business Conduct.
X NEOs are prohibited from entering or engaging
in the purchase or sale of financial instruments
that are designed to hedge or offset any
decrease in the market value of AbbVie equity
securities they hold.
X We do not include pay design features that may
have the potential to encourage excessive risk-
taking.
X We do not pay dividends on unearned
We engage annually with our largest
performance shares.
stockholders to gather feedback on our policies
and practices.
We have robust stock ownership guidelines and
prohibit the selling of shares unless ownership
guidelines have been met.
BUSINESS OVERVIEW
X We do not have single trigger change in control.
On May 8, 2020, AbbVie completed the acquisition of Allergan plc (Allergan). The acquisition of Allergan created
a diversified biopharmaceutical company positioned for success with a comprehensive product portfolio that has
leadership positions in key therapeutic areas of immunology, hematologic oncology, aesthetics, neuroscience,
and eye care.
32
| 2022 Proxy Statement
EXECUTIVE COMPENSATION
BUSINESS PERFORMANCE HIGHLIGHTS
AbbVie has delivered robust financial results since our launch in 2013
Adjusted Net Revenues
14.7%
TSR
474.7%
Approvals
21
compound annual growth rate*
9 year total stockholder return
major product or indication approvals
Market Capitalization Increase
Quarterly Dividend Increase
Adjusted Diluted EPS
~$185BN >250% 19.1%
added significant stockholder value
raised to $1.41 per share from $0.40 per
compound annual growth rate*
1,400 bps
share at inception
~90
operating margin expansion, adjusted*
active clinical development programs**
The measures set forth in this table
were calculated as of 12/31/2021.
* Net revenues, diluted earnings per share
and operating margin are adjusted to
exclude certain specified items and are
non-GAAP measures, which are
reconciled in Appendix B.
** In development individually or under
collaboration or license agreements
AbbVie has delivered a strong compound annual growth rate (CAGR) since inception on adjusted net revenues
and adjusted diluted earnings per share (EPS), placing AbbVie in the top tier of its Health Care Peer Group.
Additionally, AbbVie is committed to a robust return of capital to stockholders with an increase of more than 250%
in its quarterly dividend since 2013 as part of a balanced and disciplined capital allocation program. AbbVie’s total
stockholder return (TSR) since inception of 474.7% also places AbbVie in the top tier of its Health Care Peer
Group, and more than 175 percentage points above the Standard & Poor’s 500 Index and 285 percentage points
above the NYSE Arca Pharmaceutical Index over the same time period.
Adjusted Net Revenues*
Adjusted EPS*
$56.1
$45.8
)
N
B
$
(
$18.8
$19.9
$22.8
$32.7
$33.3
$28.2
$25.6
$5.60
$4.82
$4.29
$3.14
$3.32
$12.70
$10.56
$8.94
$7.91
2013
2014
2015
2016
2017
2018
2019
2020
2021
2013
2014
2015
2016
2017
2018
2019
2020
2021
*Net revenues and diluted earnings per share are adjusted for specified items, including the impact of intangible asset amortization, and are
non-GAAP measures, which are reconciled in Appendix B.
2022 Proxy Statement |
33
EXECUTIVE COMPENSATION
NET REVENUES*
AbbVie reported worldwide net revenues of $56.1 billion in 2021. Worldwide net revenues increased by 23% on a
reported basis or 11% on a comparable operational basis**, which included strong and balanced performance from
immunology, hematologic oncology, aesthetics, and neuroscience.
GROSS AND OPERATING MARGINS*
In 2021, AbbVie reported a gross margin of 69.0% on a GAAP basis or 83.2% of net revenues on an adjusted basis.
AbbVie’s operating margin was 31.9% on a GAAP basis or 50.3% of net revenues on an adjusted basis. The adjusted
operating margin reflects an improvement of 230 basis points versus 2020.
EARNINGS PER SHARE*
For 2021, AbbVie reported full-year diluted EPS of $6.45 on a GAAP basis and adjusted diluted EPS of $12.70, up 20.3%.
For 2022, AbbVie provided a diluted EPS guidance range of $9.26 to $9.46 on a GAAP basis and $14.00 to $14.20 on an
adjusted basis. The midpoint of the 2022 adjusted guidance represents growth of 11% over 2021, reflecting strong
operating dynamics in the underlying business.
REGULATORY MILESTONES
AbbVie also achieved a number of regulatory milestones in markets worldwide for several key products, including
regulatory approvals for Skyrizi for the treatment of active psoriatic arthritis (PsA), Qulipta for the preventive treatment of
episodic migraine in adults, Vuity for the treatment of presbyopia, and Rinvoq in three additional indications: for the
treatment of adult patients with active psoriatic arthritis (PsA), for the treatment of adult patients with active ankylosing
spondylitis (AS), and for the treatment of adults and adolescents with moderate to severe atopic dermatitis (AD). AbbVie
also submitted regulatory applications for an additional indication of Skyrizi for the treatment of patients 16 years and
older with moderate to severe Crohn’s Disease (CD) as well as Rinvoq in two additional indications: for the treatment of
adults with moderately to severely active ulcerative colitis (UC) and for adults with non-radiographic axial spondyloarthritis
(nr-AxSpa).
PIPELINE DEVELOPMENT
With more than 50 programs in mid- and late-stage development, AbbVie made significant pipeline advancements in
2021. In addition to several positive Phase 3 readouts across multiple indications for Skyrizi and Rinvoq, AbbVie also
reported positive registration enabling data for Vraylar as an adjunctive treatment for patients with major depressive
disorder (MDD) and ABBV-951, a potentially transformative therapy for patients with advanced Parkinson’s Disease.
Several important Phase 3 programs are ongoing in other areas of our pipeline, including studies for Venclexta in multiple
myeloma (MM) and myelodysplatic syndrome (MDS) and Navitoclax for mylefibrosis.
* Net revenues, adjusted gross and operating margins, and diluted earnings per share are adjusted for specified items and are non-GAAP
measures, which are reconciled in Appendix B.
**Comparable operational comparisons include full-period current year and prior year results for Allergan products, as if the acquisition closed
on January 1, 2020, and are presented at constant currency rates that reflect comparative local currency net revenues at the prior year’s
foreign exchange rates.
34
| 2022 Proxy Statement
Performance Relative to Peer Group*
AbbVie is in the top tier of its peers on several financial measures. The chart below outlines AbbVie’s eight-year
performance relative to its Health Care Peer Group.
EXECUTIVE COMPENSATION
Metric
GAAP Sales Growth
Adjusted Operating Income Growth
Adjusted EPS Growth
GAAP Operating Cash Flow Growth
Adjusted Return on Equity
Since Inception (2013-2021)
0th
25th
50th
75th
100th
100%
100%
100%
100%
100%
Metric
0th
25th
50th
75th
100th
Last Year (2021)
GAAP Sales Growth
Adjusted Operating Income Growth
Adjusted EPS Growth
GAAP Operating Cash Flow Growth
88%
88%
62%
70%
Adjusted Return on Equity
100%
*Rankings based on financial results as initially reported by AbbVie and peers in each respective fiscal year and may not be adjusted for the
impact of mergers, acquisitions, and/or divestitures.
2022 Proxy Statement |
35
EXECUTIVE COMPENSATION
TOTAL STOCKHOLDER RETURN (TSR)
Since becoming a public company in 2013, AbbVie has delivered a total stockholder return of 474.7%, which
places AbbVie in the top tier of its Health Care Peers and surpasses the cumulative total returns of the
Standard & Poor’s 500 Index and the NYSE Arca Pharmaceutical Index, as shown in the graph below. The graph
covers the period from January 2, 2013 (the first day AbbVie’s common stock began “regular - way” trading on the
NYSE) through December 31, 2021. The graph assumes $100 was invested in AbbVie common stock and each
index on January 2, 2013 and also assumes the reinvestment of dividends. The stock price performance in the
following graph is not necessarily indicative of future stock price performance.
Comparison of Cumulative Total Return since AbbVie’s Launch
$60 0
$50 0
$40 0
$30 0
$20 0
$10 0
1/02/13
12/31/13
12/31/14
12/31/15
12/31/16
12/31/17
12/31/18
12/31/19
12/31/20
12/31/21
AbbVie Inc.
S&P 500 Index
NYSE Arca Pharmaceutical Index
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| 2022 Proxy Statement
COMPONENTS OF OUR COMPENSATION PROGRAM
The compensation committee of the board oversees our executive compensation program, which includes
several compensation elements that have each been tailored to incentivize and reward specific aspects of
company performance the board believes are central to delivering long-term stockholder value. Key
components of our compensation program are listed below.
EXECUTIVE COMPENSATION
Base Salary
Designed to be competitive
with market and industry
norms, and to reflect
individual performance
Individual salaries are
established relative to market
median based on each
NEO’s individual
performance, skills, and
experience, and internal
equity, as well as the
company’s annual operating
budget
Short-Term
Incentives
Long-Term
Incentives
80% Performance
shares and
performance-vested
restricted stock units
20% Non-qualified
stock options
Performance Incentive
Plan (PIP)
Based on non-GAAP
performance measures
such as:
— Net revenues
— Income before taxes
— Operating margin
— Return on assets
— Strategic and
leadership goals
Our Compensation
Philosophy
Align executive interests
with the drivers of
stockholder returns and
profitable growth
Support achievement of
the company’s primary
business goals to have a
remarkable impact on
patients’ lives
Attract and retain world-
class executives whose
talents and contributions
sustain the growth in long-
term stockholder value
The compensation committee is dedicated to ensuring that a substantial portion of executive compensation is “at-
risk” and variable. Generally, more than three-fourths of our NEOs’ total direct compensation is variable and
directly affected by both the company’s and the NEO’s performance.
The committee believes the use of non-GAAP metrics to measure company performance for incentive plan
purposes is appropriate. The use of certain non-GAAP metrics aligns NEOs to performance objectives that are
commonly used to evaluate the performance of the company, provide accountability, and avoid inappropriate
windfalls or penalties due to factors outside of their control. Importantly, both the goals and the financial
performance are presented on a consistent non-GAAP basis.
2021 PERFORMANCE RESULTS
The performance targets established under our annual and long - term incentive plans are rigorous and calibrated
to a range of potential outcomes, with above target payouts for strong performance and below target payouts
(including no payout) for below target performance. Targets are based on expected business, market and
regulatory conditions, including expectations for our pipeline. The financial goals shown in the following table were
carried by all of the NEOs as part of their 2021 performance goals. The specific weightings for each NEO are
established at the start of each performance year based on the NEO’s role and anticipated contributions to the
company’s annual objectives. Financial goals are set rigorously; achievement of these targets has resulted in
top - tier industry performance.
2022 Proxy Statement |
37
EXECUTIVE COMPENSATION
Financial Goals
Goal and Expected Result(1)
A. Non - GAAP Net Revenues
B. Non - GAAP Income Before Taxes
C. Adjusted Return on Assets
D. Non - GAAP Operating Margin
2020 Actual 2021 Target
55.0 BN
$
$
25.4 BN
45.5 BN (2) $
20.1 BN (2) $
22.1 %
22.1 BN (2) $
$
19.4 % (3)
27.8 BN
2021 Target vs.
2020 Actual
121 % $
126 % $
88 % (3)
126 % $
2021 Actual
55.5 BN (2)
25.9 BN (2)
19.5 %
28.2 BN (2)
2021 Actual vs.
2021 Target
101 %
102 %
101 %
102 %
(1) Results achieved reflect certain specified items, which are reconciled in Appendix B.
(2) Evaluated on a constant currency basis.
(3) 2020 Actual included only 8 months of Allergan’s results; 2021 Target reflects 12 months of Allergan’s impact
and the overall larger asset base due to Allergan.
The committee reviews and ensures all goals are appropriately rigorous and in line with the long - term success of
the company. Each NEO achieved or exceeded his or her 2021 goals, which are listed below:
• Richard A. Gonzalez: Drive top - tier business performance; execute key strategic initiatives to drive
sustainable long - term business performance; deliver value to our stockholders, building investor confidence
and credibility; successfully advance mid- and late - stage pipeline assets; continue to drive employee
engagement and motivation around AbbVie’s mission and future prospects; and advance our transformation
to a biopharmaceutical culture.
• Robert A. Michael: Achieve proprietary pharmaceutical pipeline enhancement objectives; and provide
support on corporate strategic initiatives and build shareholder value through investor activities.
• Laura J. Schumacher: Successfully continue to develop and implement strategies to effectively resolve key
litigation matters; achieve proprietary pharmaceutical pipeline enhancement objectives; execute biologics
strategic development initiatives; and support research and development initiatives per company strategy.
• Michael E. Severino: Achieve key research and development milestones per company strategy; and achieve
proprietary pipeline innovation objectives.
• Jeffrey R. Stewart: Achieve key product milestones; and successfully adapt and execute market strategies
relative to external considerations.
In 2021, our NEOs continued to take a formal goal aligned to protecting AbbVie’s reputation across a range of
environmental, social, and governance (ESG) topics aligned to our long-term company strategy and ESG
framework. The ESG goal was weighted 10% within the short-term incentive program for each NEO. As part of
this ESG goal category, all senior leaders, including the NEOs, continued to take a goal aligned to executing the
Equity, Equality, Diversity & Inclusion (EED&I) strategy.
AbbVie’s senior executives have different areas of focus when it comes to driving the company’s ESG framework,
and together, the executives’ ESG goals cover all of AbbVie’s material ESG drivers (which are discussed in more
detail on page 8 of this proxy statement). These executives’ ESG goals are a mix of quantitative goals (for
38
| 2022 Proxy Statement
EXECUTIVE COMPENSATION
example, reducing carbon emissions using a specific target) and qualitative goals (for example, maintaining status
as a top employer).
Key achievements under the ESG goal category in 2021 by AbbVie’s senior executives included, for example:
• Committed to joining the Science-based Targets Initiative (SBTi) by setting ambitious science-based
emissions reduction targets to support limiting global temperature rise to no more than 1.5 degrees Celsius
above pre-industrial levels.
• Expanded access to patients who have difficulty paying for their medicine by providing medicine to more than
170,000 U.S. patients at no cost through our patient assistance program.
• Established an ESG Council, chaired by our Vice Chairman, External Affairs and Chief Legal Officer and
composed of senior-level leaders from across the company to further strategic, enterprise-aligned delivery on
AbbVie’s ESG Framework.
• Continued progress on AbbVie’s EED&I strategy, including:
• Our top EED&I indicators of performance – including representation and education – were
included in AbbVie’s 2021-2022 Strategic Roadmap to help deliver AbbVie’s EED&I vision,
strategy and priorities across the company.
• We continue to drive an inclusive culture through driving awareness and understanding. Each
year, AbbVie employees and people leaders complete learning sessions to strengthen our
AbbVie community and realize the full value of our diverse workforce. More than 90% of
employees and senior leaders completed a learning session.
• We have several initiatives to develop and engage our diverse talent. In 2021, we increased
participation in our Executive Diversity Mentoring Program by 300% and launched a Sponsorship
program, building on our culture of mentorship with an emphasis on equity, to create more
pathways for talent of diverse backgrounds and experiences to be successful at AbbVie.
• We are focused on creating connections and building a sense of community, well-being and
belonging. In 2021, we increased overall membership in Employee Resource Groups by 30% and
conducted a series of virtual employee voice sessions focused on enhancing workplace culture
and advancing inclusion.
• Maintained recognition as a top employer in our industry, including:
• DiversityInc “Top 50 Companies for Diversity” – Top 15
• FORTUNE “100 Best Companies to Work For” – Included for four consecutive years
• Great Place to Work “World’s Best Workplaces” – Included for five consecutive years
• More details on the external recognition of AbbVie’s efforts can be found on page 11 of this proxy
statement.
STOCKHOLDER ENGAGEMENT
2021 Say on Pay Results
At our 2021 Annual Meeting, the say on pay proposal received support from over
89% of our stockholders. The board and compensation committee are encouraged
by the continued, consistent stockholder support for our executive compensation
program.
89%
Say on Pay Results
AbbVie is committed to regular, ongoing engagement with stockholders to ensure that we continue to understand
stockholder feedback about our compensation program and incorporate that feedback into the compensation
decision-making process. To that end, in 2021 AbbVie reached out to stockholders representing nearly 40% of
the company’s outstanding shares.
In these discussions, the aggregate feedback acknowledged the alignment of our executives’ pay with AbbVie’s
performance and expressed support for our compensation program, consistent with the level of stockholder
support for our say on pay proposals since inception. The feedback informs the compensation committee’s
continuous assessment of the program design and ongoing discussions with stockholders, which contribute to the
evolution of the programs.
2022 Proxy Statement |
39
EXECUTIVE COMPENSATION
COMPENSATION PROGRAM GOVERNANCE SUMMARY
In addition to strong alignment of pay with the performance of the company and our NEOs, we maintain and are
committed to good governance practices, including the following:
Good Governance Practices
Annual incentive plan includes financial, operational, and strategic metrics to assess
performance
Balanced Incentive
Plan Design
Annual incentive payout matrix used to define and cap the range for the committee’s
determinations (at or below the plan maximum of 200% of target)
Long-term incentive design emphasizing multiple, relative performance metrics and
multi-year performance periods
No duplication of performance metrics in short- and long-term incentives
Pay Equity and
Sustainability
Commitment to pay equity and annual pay equity analyses to ensure pay is
equitable across genders and ethnicities among U.S. employees
Incorporation of ESG into the strategic/leadership goals within the annual incentive
plan
Strong Governance
Practices
Committee has broad discretion to claw back incentive awards in the unlikely event
of a restatement of earnings or material breach of the AbbVie Code of Business
Conduct
Anti-hedging and anti-pledging policies
Annual comprehensive compensation program risk review
Independent compensation consultant that performs no other work for the company
Pay for Performance
and Stockholder
Alignment
Short- and long-term incentive programs closely align with performance
Majority of NEO compensation tied to long-term performance
Proactive stockholder engagement process
Robust Stock
Ownership
Requirements
6x salary for CEO and 3x salary for NEOs
5x annual fees for non-employee directors
NEOs must hold and not sell equity until the minimum stock ownership requirement
is satisfied
Responsible Pay
Practices
No single trigger vesting of equity or other benefits in the event of a change in
control
No repricing of stock options without express stockholder approval
No tax gross-ups in executive compensation program
No employment contracts
No guaranteed short-term incentives or equity awards
No dividends paid on unearned performance awards
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| 2022 Proxy Statement
EXECUTIVE COMPENSATION
Executive Compensation Process
COMMITMENT TO PERFORMANCE-BASED AWARDS
The majority of AbbVie’s NEO pay is performance - based. Specific goals and targets are the foundation of our
pay - for - performance process, and this section describes how they apply to each pay component. Though
quantitative metrics such as financial and operational results are a central part of our performance assessment,
some goals such as leadership and progress against strategic and long - term objectives are difficult to measure
using numeric or formulaic criteria. As such, the compensation committee also conducts a qualitative assessment
of individual performance to ensure the overall assessment of performance and pay decisions are aligned with the
company’s true performance over a period of time. A discussion of the decision - making criteria for each pay
component follows.
COMMITTEE PROCESS FOR SETTING TOTAL COMPENSATION
Each February, the committee, with the assistance of its independent compensation consultant and AbbVie’s
management team, determines pay levels for NEOs. The process starts with a consideration of compensation
levels and the mix of compensation for comparable executives at companies in AbbVie’s Health Care Peer
Group, which are listed below in the section captioned “Compensation Benchmarking.” After this benchmark
review, the committee establishes NEO compensation—base salary adjustments, annual incentive awards, and
long - term incentive awards—relative to the peer median in each instance. Awards can be differentiated from the
peer compensation levels based on company performance, each NEO’s individual performance, leadership, and
contributions to AbbVie’s business and strategic performance.
COMPENSATION BENCHMARKING
To provide the appropriate context for executive pay decisions, the committee, in consultation with its
independent compensation consultant, assesses the compensation practices and pay levels of AbbVie’s Health
Care Peer Group. The committee chooses to focus on the Health Care Peer Group because its constituents
share important characteristics with AbbVie, particularly the global emphasis on research - based pharmaceuticals
and biopharmaceutical therapies and the regulatory environment within which they operate. Members of the
Health Care Peer Group are AbbVie’s primary competitors for executive talent and are companies the committee
believes chiefly represent our competitive market:
Health Care Peer Group
Amgen, Inc.
Bristol - Myers Squibb Company
Eli Lilly and Company
Gilead Sciences, Inc.
GlaxoSmithKline plc
Johnson & Johnson
Merck & Company, Inc.
Novartis AG
Pfizer Inc.
ROLE OF THE COMPENSATION CONSULTANT
The compensation committee has engaged Compensation Advisory Partners as its independent compensation
consultant. The committee’s independent consultant reports directly to the chair of the committee. The consultant
meets regularly, and as needed, with the committee in executive sessions, has direct access to the chair during
and between meetings, and performs no other services for AbbVie or its senior executives. The committee
determines what variables it will instruct its consultant to consider, which include: peer groups against which
performance and pay should be examined, metrics to be used to assess AbbVie’s performance, competitive
incentive practices in the marketplace, and compensation levels relative to market benchmarks.
2022 Proxy Statement |
41
EXECUTIVE COMPENSATION
COMPENSATION RISK OVERSIGHT
The company has established, and the compensation committee endorses, several controls to address and
mitigate compensation - related risk, such as employing a diverse set of performance metrics, maintaining robust
stock ownership guidelines for its executives and non - employee directors, and retaining broad discretion to
recover incentive awards in the unlikely event that incentive plan award decisions are based on earnings that are
subsequently restated or based on misconduct that would constitute a material breach of the AbbVie Code of
Business Conduct. The committee, in collaboration with its independent compensation consultant, identified no
material risks in AbbVie’s compensation programs in 2021.
When considering compensation-related risk, the committee is aware of certain risks associated with drug pricing
decisions. The committee weighs these, as well as other risks material to the company, when designing AbbVie’s
compensation programs. In addition, the committee, comprised entirely of independent directors, has discretion to
adjust incentive payments, if needed, including to reflect decisions executives make that may impact AbbVie’s
reputation and long-term sustainability.
Compensation Plan Elements
Three primary components make up AbbVie’s executive pay program: (1) base salary, (2) short - term incentives
and (3) long - term incentives. The structure of each component is tailored to serve a specific function and
purpose.
BASE SALARY
The compensation committee sets appropriate levels of base salary to ensure that AbbVie can attract and retain a
leadership team that will continue to meet our commitments to customers and patients and sustain long - term
profitable growth for our stockholders. Generally, the committee considers the median of the Health Care Peer
Group as an initial benchmark, but also references additional information as needed. Specific pay rates are then
established for each NEO relative to his or her market benchmark based on the NEO’s performance, experience,
unique skills, internal equity with others at AbbVie, and the company’s operating budget.
SHORT-TERM INCENTIVES
Performance Incentive Plan
Annual cash incentives are paid to NEOs through AbbVie’s Performance Incentive Plan (PIP), which rewards
executives for achieving key financial and non - financial goals measured at the company and individual levels.
AbbVie’s PIP structure is designed to align NEOs’ interests directly with AbbVie’s annual operating strategies to
advance our mission, financial goals, and leadership behaviors. In doing so, it provides a direct link between the
NEOs’ short - term incentives and the company’s and the NEOs’ annual performance results through measurable
financial and operational performance followed by qualitative assessments of clearly defined strategic progress
and leadership behaviors.
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| 2022 Proxy Statement
EXECUTIVE COMPENSATION
NEO target incentive amounts are set as a percentage of base salary. Mr. Gonzalez’s target is 165% of base
salary. The targets for the other NEOs range from 110% to 125% of base salary. The maximum potential payout
under the PIP is capped at 200% of target for all participants.
Determining actual incentive amounts is a multi - step process. First, an initial performance score is calculated for
each NEO based on performance against weighted financial and strategic/leadership goals. This performance
score results in a preliminary award amount of up to 100% of target only. Final awards are determined by the
compensation committee based on a qualitative assessment of holistic performance. A formal payout matrix
based on net revenues and income before taxes guides the committee by capping the range of final awards at or
below the plan maximum of 200% of target. This process is more fully described below:
Illustration of 2021 Incentive Calculation
Target
Award
x
Performance
Score
=
Preliminary
Award
→
Final Committee
Decision
=
Final
Award
Plan Governance:
Maximum
100% of Target
per plan design
2021 Performance results:
Capped at 175% of Target per payout matrix
(below 200% plan maximum)
Initial Performance Score
Initial performance scores are calculated for each NEO based on performance against weighted financial and
strategic/leadership goals. The goals and their respective weightings are summarized in the chart below. The
specific goals and weightings for each NEO (including the CEO) are established at the start of each performance
year based on the NEO’s role and anticipated contributions to the company’s annual objectives.
Net Revenues,
Income Operating Margin,
and Return on
Before
Assets
Taxes
R&D/
Innovation
Business
Development
ESG
Allergan
Integration
Other
Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Michael E. Severino
Jeffrey R. Stewart
20 %
20 %
20 %
20 %
20 %
50 %
60 %
20 %
20 %
50 %
10 %
10 %
30 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
10 %
20 %
10 %
Assessments of performance against financial results consider the effect of foreign exchange and other specified
adjustments and/or unusual or unpredictable events, and the appropriateness of these adjustments is reviewed
annually by the committee. In 2021, specified adjustments included intangible asset amortization, acquisition and
integration - related costs, milestones and other research and development expenses, acquired in process
research and development, change in fair value of contingent consideration, tax audit settlements, impacts related
to tax law changes, and other items, as described in Appendix B.
2022 Proxy Statement |
43
EXECUTIVE COMPENSATION
Annual Incentive Payout Matrix and Final Committee Decisions
The annual incentive payout matrix establishes a potential range of final incentive outcomes based on net
revenues and income before taxes. For 2021, actual net revenue performance was 101% compared to target,
while actual income before taxes was 102% compared to target. As a result of this performance, the annual
incentive payout matrix capped the annual incentives at 175% of target, below the plan maximum of 200% of
target.
Annual Incentive
Payout Matrix(1)
Non - GAAP Net Revenues
Non - GAAP Income Before
Taxes
2020 Actual 2021 Target
$ 45.5 BN (2) $ 55.0 BN
2020 Actual
121 % $
2021 Actual
55.5 BN (2)
2021 Target vs.
2021 Actual vs.
2021 Target
101 %
$ 20.1 BN (2) $ 25.4 BN
126 % $
2021 Payout
Matrix Result
25.9 BN (2)
Capped at 175% of target
(below 200% plan maximum)
102 %
(1) Results achieved reflect certain specified items, which are reconciled in Appendix B.
(2) Evaluated on a constant currency basis.
Final awards are determined by the compensation committee based on a qualitative assessment of holistic
performance. While the committee relies heavily on objective, quantitative metrics to determine PIP awards, this
qualitative element ensures the review is comprehensive and includes all individual, strategic, and leadership
goals for which assessment is not dictated solely by numeric or formulaic applications. Moreover, while each
participant has predetermined goals, the committee also considers relative achievements and/or developments in
the company, the marketplace, and the global economy that could not have been foreseen when individual goals
were established. Actual awards paid ranged from 152% to 175% of the target award.
Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Michael E. Severino
Jeffrey R. Stewart
Target
Award
Actual Award
Paid
Incentive
Target %
$ 2,805,000
$4,908,750
1,625,000 2,630,000
2,638,860
1,507,920
2,700,000
1,775,725
2,050,000
1,189,650
165 %
125 %
120 %
125 %
110 %
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| 2022 Proxy Statement
LONG-TERM INCENTIVES
The LTI program design aligns AbbVie’s long - term incentive compensation with key operational and financial
initiatives, including sustained EPS growth and generation of superior investment returns relative to peers. In
2021, NEOs received annual grant LTI awards with the following characteristics:
Long - Term Incentive Program
EXECUTIVE COMPENSATION
Award Type
40% Performance Shares
40% Performance - Vested Restricted Stock
20% Non - Qualified Stock Options
Metric
EPS 3 - Year Relative TSR Modifier
Relative Return on Invested Capital
Stock Price Appreciation
3 Years
3 Years
10 - year term
Performance Period
• Performance Shares (40% of total LTI award)—These awards have the potential to vest at 0% to 250% of
target after a three - year performance period and are earned based on company performance in earnings per
share (EPS) and relative total stockholder return (TSR). TSR performance is measured relative to a group
made up of companies that are constituents in either the S&P Pharmaceutical, Biotech, and Life Science
Index or the NYSE Arca Pharmaceutical Index. Dividends on performance shares accrue during the
performance period and are paid at vesting only to the extent that shares are earned.
• Performance - Vested Restricted Stock (40% of total LTI award)—These awards have the potential to vest
at 0% to 200% of target in one - third increments during a three - year performance period based on AbbVie’s
return on invested capital (ROIC) articulated as pre - set goals and measured relative to a group made up of
companies that are constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the
NYSE Arca Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting
only to the extent that shares are earned.
• Non - Qualified Stock Options (20% of total LTI award)—These awards have the potential to vest in
one - third increments on each of the first three annual anniversaries of the grant date, subject to continued
employment with the company. The option exercise price is set at or above fair market value on the grant
date. To the extent that the options vest, the award expires ten years after the grant date.
Performance Share and Performance - Vested Restricted Stock Performance Targets and
Results
Performance targets and results associated with the 2021 annual grant awards of performance shares and
performance - vested restricted stock are shown below. Total stockholder return results are in progress; these
results and their impact on final payout will be disclosed following the completion of the three - year performance
period.
Performance Objective
Adjusted Diluted
EPS(1)
Relative TSR
Relative ROIC
(2021 Award)
Relative ROIC
(2020 Award)
Relative ROE
(2019 Award)
Threshold
$12.37
Target
Maximum
Result
Impact on Payout
$12.42
$12.62
$12.70
200%
Relative TSR is measured over a 3 - year performance period and used as a modifier
40th - 50th
percentile
40th - 50th
percentile
50th - 75th
percentile
50th - 65th
percentile
50th - 65th
percentile
75th - 90th
percentile
>85th
percentile
>85th
percentile
>90th
percentile
80th
percentile
79th
percentile
>90th
percentile
175%
175%
150%
(1) Diluted earnings per share is adjusted to exclude certain specified items and is a non - GAAP measure, which
is reconciled in Appendix B.
2022 Proxy Statement |
45
EXECUTIVE COMPENSATION
AbbVie granted performance shares in 2019 that were subject to a 3 - year performance cycle that ended
December 31, 2021. The table below describes the performance objectives, outcomes, and shares earned.
Performance
Objective
Relative TSR
Threshold
15 pts below
index
Target
Equal to index
performance
Maximum
15 pts above
index
Actual
9.5 pts above
index
Performance
Modifier
115%
AbbVie’s policy with respect to its annual equity award for all eligible employees, including the NEOs, is to grant
the award and set the grant price at the compensation committee’s regularly scheduled February meeting each
year.
These meeting dates generally are the third Thursday of February and are scheduled two years in advance. The
grant price is the average of the highest and lowest trading prices of a common share on the date of the grant
(rounded up to the next even penny). The grant price for the 2021 annual grant was $105.92. The high, low and
closing prices of an AbbVie common share on the grant date (February 18, 2021) were $106.61, $105.21, and
$106.06 respectively. All LTI awards are subject to a minimum vesting period of 12 months.
BENEFITS
Benefits are an important part of retention and capital preservation for all employees, helping to protect against
the impact of unexpected catastrophic loss of health and/or earnings potential, as well as providing a means to
save and accumulate for retirement or other post - employment needs.
Each of the benefits described below supports the company’s objective of providing a market competitive total
rewards program. Individual benefits do not directly affect decisions regarding other benefits or pay components,
except to the extent that all benefits and pay components must, in aggregate, be competitive, as previously
discussed.
Retirement Benefits
The NEOs and other eligible U.S. employees participate in the AbbVie Pension Plan, the company’s principal
qualified defined benefit plan. NEOs and certain other employees also participate in the AbbVie Supplemental
Pension Plan. These plans are described in greater detail in the section of this proxy statement captioned
“Pension Benefits.”
The Supplemental Pension Plan is a non - qualified defined benefit plan that cannot be secured in a manner similar
to a qualified plan, for which assets are held in trust, so eligible NEOs receive an annual cash payment equal to
the increase in the present value of their Supplemental Pension Plan benefit. Eligible NEOs have the option of
depositing the annual payment into an individually established grantor trust, net of tax withholdings. Deposited
amounts may be credited with the difference between the NEO’s actual annual trust earnings and the rate used to
calculate trust funding (currently 8 percent). Amounts deposited in the individual trusts are not tax - deferred and
the NEOs personally pay the taxes on those amounts without gross - ups.
The manner in which the grantor trust assets are to be distributed to an NEO upon retirement from the company
generally follows the distribution method elected by the NEO under the AbbVie Pension Plan. If an NEO (or the
NEO’s surviving spouse, depending on the pension distribution method elected by the NEO under the AbbVie
Pension Plan) lives beyond the actuarial life expectancy age used to determine the Supplemental Pension Plan
benefit, and therefore exhausts the trust balance, the Supplemental Pension Plan benefit will be paid to the NEO
(or his or her surviving spouse) by AbbVie.
Savings Plans
The NEOs and other eligible U.S. employees are permitted to defer a portion of their annual base salary under
the AbbVie Savings Plan, the company’s principal qualified defined contribution plan, up to the IRS contribution
limits. Eligible NEOs also may defer up to 18 percent of their base salary, less contributions to the AbbVie
Savings Plan, to the AbbVie Supplemental Savings Plan, which is a non - qualified defined contribution plan.
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| 2022 Proxy Statement
EXECUTIVE COMPENSATION
Eligible NEOs may defer these amounts to unfunded book accounts or choose to have the amounts paid in cash
on a current basis and deposited into individually established grantor trusts, net of tax withholdings. These
amounts are credited annually with earnings. Amounts deposited in the individual trusts are not tax - deferred and
the NEOs personally pay the taxes on those amounts without gross - ups.
NEOs elect the manner in which the assets held in their grantor trusts will be distributed to them upon retirement
or other separation from the company. These arrangements are described in greater detail in this proxy statement
beginning with the section captioned “Summary Compensation Table.”
Financial Planning
NEOs are paid an annual stipend of $10,000 for estate planning advice, tax preparation and general financial
planning fees. The stipend is income to the NEO, who is responsible for payment of all resulting taxes without
gross - ups.
Company - Provided Transportation
NEOs are eligible for transportation perquisites that are designed to improve the effectiveness and efficiency of
their work, including the use of a company - leased vehicle and access to company - provided air travel, as
appropriate. In some circumstances, these benefits may be used for personal travel, which would then be
considered part of the NEO’s total compensation and treated as taxable income to them under applicable tax
laws. The NEOs pay the taxes on such income without gross - ups.
Disability Benefits
In addition to AbbVie’s standard disability benefits, NEOs are eligible for a monthly long - term disability benefit,
which is described on page 62 of this proxy statement.
EMPLOYMENT AGREEMENTS
AbbVie does not have employment agreements with any of its NEOs.
EXCISE TAX GROSS-UPS
AbbVie does not provide excise tax gross - ups on NEO compensation.
CHANGE IN CONTROL AGREEMENTS
AbbVie has entered into change in control agreements with its NEOs to aid in retention and recruitment,
encourage continued attention and dedication to assigned duties during periods involving a possible change in
control of the company, and to protect the earned benefits of the NEOs against potential adverse changes
resulting from a change in control.
The change in control agreements contain a double - trigger feature, meaning that if the NEO’s employment is
terminated other than for cause or permanent disability, or if the NEO elects to terminate employment for good
reason, within two years following a change in control, he or she is entitled to receive certain pay and benefits as
described in the section of this proxy statement captioned “Potential Payments upon Termination or Change in
Control.”
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47
EXECUTIVE COMPENSATION
Other Matters
STOCK OWNERSHIP GUIDELINES
AbbVie’s stock ownership guidelines are designed to further promote sustained stockholder return and to ensure
the company’s senior executives remain focused on both short- and long - term objectives. Each senior executive
has five years from the date of election or appointment to his or her position to achieve the ownership level
associated with his or her position. NEOs are not allowed to sell stock, except for tax withholding at vesting or
exercise, if they do not satisfy the minimum stock ownership requirement. The minimum stock ownership
guidelines for the CEO and other NEOs are as follows:
Executive
Richard A. Gonzalez
Robert A. Michael
Laura J. Schumacher
Michael E. Severino
Jeffrey R. Stewart
Stock Ownership Requirement Requirement Met?
6x Base Salary
3x Base Salary
3x Base Salary
3x Base Salary
3x Base Salary
Yes
Yes
Yes
Yes
Yes
In addition, AbbVie’s non - employee directors are required to own AbbVie stock valued at five times (5x) the
annual fee for service as a director under the AbbVie Non - Employee Directors’ Fee Plan within five years of
joining the board or as soon as practicable thereafter.
CLAWBACK POLICY
The committee does not anticipate there would ever be circumstances where a restatement of earnings upon
which any incentive plan award decisions were based would occur or circumstances where an executive officer
engages in misconduct that would constitute a material breach of the AbbVie Code of Business Conduct.
Nevertheless, the committee, in evaluating such circumstances, has broad discretion to take all actions necessary
to protect the interests of stockholders, up to and including actions to recover incentive awards. Further, the
company is committed to disclosing in its annual proxy statement the occurrence of any recoupment regarding an
executive officer when the underlying violation has already been publicly disclosed in company filings with the
SEC. For more details, AbbVie’s Code of Business Conduct is available in the corporate governance section of
AbbVie’s investor relations website at www.abbvieinvestor.com.
ANTI-HEDGING AND ANTI-PLEDGING POLICIES
AbbVie has a formal policy that prohibits directors and officers subject to Section 16 of the Exchange Act,
including all of the NEOs, from entering into or engaging in the purchase or sale of financial instruments that are
designed to hedge or offset any decrease in the market value of AbbVie equity securities they hold. AbbVie also
has a formal policy that prohibits directors and officers subject to Section 16 of the Exchange Act, including all of
the NEOs, from pledging AbbVie common stock as collateral for a loan.
In addition, the AbbVie Amended and Restated 2013 Incentive Stock Program provides that no long - term
incentive award may be assigned, alienated, sold or transferred other than by will or by the laws of descent and
distribution or as permitted by the compensation committee for estate planning purposes, and no award and no
right under any award may be pledged, alienated, attached or otherwise encumbered. All members of senior
management, including the company’s NEOs and certain other employees, are required to clear any transaction
involving company stock with the Legal department prior to entering into such transaction.
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EXECUTIVE COMPENSATION
Compensation Committee Report
The compensation committee of the board of directors is primarily responsible for reviewing, approving and
overseeing AbbVie’s compensation plans and practices, and works with management and the committee’s
independent compensation consultant to establish AbbVie’s executive compensation philosophy and programs.
The committee reviewed and discussed the Compensation Discussion and Analysis with management and
recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy
statement.
Compensation Committee
R. Austin, Chair, T. Freyman, E. Liddy, G. Tilton, and F. Waddell
Compensation Risk Assessment
During 2021, in collaboration with the compensation committee’s independent compensation consultant, AbbVie
conducted an in - depth risk assessment of its compensation policies and practices, including those related to
executive compensation programs for NEOs. The risk assessment included a quantitative and qualitative analysis
of AbbVie’s executive compensation programs and broader employee incentive compensation plans. AbbVie also
considered how these programs compare, from a design perspective, to programs maintained by other
companies. Based on this assessment, it was determined that AbbVie’s executive compensation programs are
balanced and appropriately incent employees, and any risks arising from the compensation policies and practices
are not reasonably likely to have a material adverse effect on AbbVie. The following factors were among those
considered in making this determination:
• AbbVie is committed to pay equity and conducts pay equity analyses annually to ensure pay is equitable
across genders and ethnicities among U.S. employees.
• AbbVie’s compensation structure contributes to a corporate culture that encourages our NEOs to regard
AbbVie as a long - term employer. For example, equity awards vest over multi - year periods, which encourages
NEOs to consider the long - term impact of their decisions and align their interests with those of AbbVie’s
stockholders.
• AbbVie’s annual incentive program is based on multiple performance measures, balancing earnings
achievement with other factors. Since earnings are a key component of stock price performance, this aspect
of AbbVie’s compensation plan also promotes alignment with stockholder interests.
• AbbVie does not include certain pay design features that may have the potential to encourage excessive
risk - taking, such as: over - weighting toward annual incentives, highly leveraged payout curves, unreasonable
thresholds or dramatic changes in payout opportunity at certain performance levels that may encourage
inappropriate short - term business decisions to meet payout thresholds. In addition, a limit of 200% of target
applies to any awards made under the NEO short - term incentive plan.
• AbbVie’s long - term incentive program focuses NEOs on longer - term operating performance and aligns NEOs
with stockholder interests through the use of multi - year performance periods and multiple performance
measures, including relative total stockholder return. In 2021, AbbVie’s NEOs received roughly two - thirds of
their total direct compensation in the form of long - term incentives (20% of which are stock options that may
vest over a three - year period and 80% of which are performance - based awards that may vest over a
three - year performance period).
• AbbVie makes equity awards and sets grant prices at the same time each year, at the compensation
committee’s regularly scheduled meeting in February. In addition, AbbVie does not award discounted stock
options or immediately vesting equity awards.
• AbbVie has robust stock ownership guidelines for its senior executives, which promotes alignment with
stockholder interests, and other good governance equity practices such as anti - hedging and anti - pledging
policies.
• AbbVie’s compensation committee has the ability to exercise downward discretion in determining annual
incentive plan payouts.
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49
EXECUTIVE COMPENSATION
• AbbVie’s compensation committee has broad discretion to claw back incentive compensation that was
awarded based on financials that were later restated or based on a material breach of the AbbVie Code of
Business Conduct.
• AbbVie requires mandatory training on its code of conduct and policies and procedures to educate its
employees on appropriate behaviors and the consequences of taking inappropriate actions.
The risk assessment results were presented to the compensation committee by its independent compensation
consultant.
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EXECUTIVE COMPENSATION
Summary Compensation Table
This section contains compensation information for AbbVie’s NEOs for the fiscal year ended December 31, 2021.
The following table summarizes compensation awarded to, earned by and/or paid to AbbVie’s NEOs in
connection with their service to AbbVie during 2021, 2020 and 2019, as applicable. The section of this proxy
statement captioned “Compensation Plan Elements” describes in greater detail the information reported in this
table.
Change
in Pension
Value and
Non - qualified
Deferred
Non - Equity
Stock Option Incentive Plan Compensation
All Other
Name and Principal Position
Richard A. Gonzalez
Chairman of the Board and
Chief Executive Officer
Robert A. Michael
Vice Chairman, Finance and
Commercial Operations and CFO 2019
Laura J. Schumacher
Vice Chairman, External Affairs
and Chief Legal Officer
Michael E. Severino
Vice Chairman and President
Jeffrey R. Stewart
Executive Vice President, Chief
Commercial Officer
Salary Bonus
($)
Year
($)
2021 $ 1,700,000
2020 1,688,462
2019 1,650,000
2021 1,129,881
2020 1,065,385
906,865
2021 1,248,154
2020 1,211,808
2019 1,176,538
2021 1,411,031
2020 1,369,923
2019 1,330,000
2021 1,074,231
Awards Awards Compensation
($)(3)
($)(2)
($)(1)
4,908,750
0 12,573,689 3,134,649
4,908,750
0 11,644,996 2,781,662
4,335,000
8,887,088 2,246,253
0
2,630,000
4,258,823 1,061,733
0
2,110,000
5,406,515 1,291,477
0
1,800,000
0 2,704,766
683,643
2,638,860
4,258,823 1,061,733
0
2,550,000
5,822,401 1,390,831
0
2,400,000
0 3,400,155
859,429
2,700,000
4,258,823 1,061,733
0
2,700,000
5,822,401 1,390,831
0
2,400,000
808,642
0 3,199,248
2,050,000
707,822
2,839,144
0
Earnings Compensation
($)(6)
($)(4)(5)
780,993
2,224,135
3,366,720
2,525,840
3,571,858
2,622,108
2,912,698
5,716,702
6,579,440
1,437,307
1,910,985
1,525,091
2,212,898
Total
($)
814,073 $ 23,912,154
759,586 24,007,591
1,125,537 21,610,598
61,389 11,667,666
49,394 13,494,629
8,772,853
55,471
291,570 12,411,838
434,534 17,126,276
727,225 15,142,787
181,026 11,049,920
216,918 13,411,058
9,508,448
245,467
9,013,096
129,001
(1) In accordance with Securities and Exchange Commission (SEC) rules, the amounts in this column represent
the aggregate grant date fair value of the awards determined in accordance with Financial Accounting
Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718. AbbVie generally determines
the grant date fair value of stock awards by multiplying the number of shares granted by the average of the
high and low market prices of one share of AbbVie common stock on the award grant date. The grant date
fair value of performance shares with a TSR market condition are determined using the Monte Carlo
simulation model.
(2) In accordance with SEC rules, the amounts in this column represent the aggregate grant date fair value of the
awards determined in accordance with FASB ASC Topic 718. These amounts were determined as of the
option grant date using a Black - Scholes stock option valuation model. These amounts are being reported
solely for the purpose of comparative disclosure in accordance with the SEC rules. There is no certainty that
the amount determined using a Black - Scholes stock option valuation model would be the value at which
employee stock options would be traded for cash. The weighted - average assumptions used to estimate the
grant date fair value of options granted in 2021, along with the weighted - average grant date fair value, are
shown below:
Assumption
Risk - free interest rate
Average life of options (years)
Volatility
Dividend yield
Fair value per stock option
0.77 %
6.1
30.17 %
4.88 %
$
16.28
(3) The compensation reported in this column for 2021 was earned as a performance - based incentive award
pursuant to the AbbVie Performance Incentive Plan. Additional information regarding the plan can be found in
the Compensation Plan Elements section of this proxy statement.
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51
EXECUTIVE COMPENSATION
(4) The plan amounts shown below are reported in this column, except as described in this paragraph. The
amounts shown beside each NEO’s name are for 2021, 2020, and 2019, respectively, as applicable. Negative
amounts under the AbbVie Pension Plan and the AbbVie Supplemental Pension Plan are excluded from this
column in accordance with SEC rules.
AbbVie Pension Plan
R. Gonzalez: $(9,939) / $8,696 / $(8,305); R. Michael: $30,894 / $214,038 / $246,392; L. Schumacher:
$66,444 / $219,159 / $318,167; M. Severino: $34,910 / $58,277 / $57,916; and J. Stewart: $37,175.
AbbVie Supplemental Pension Plan
R. Gonzalez: $(1,096,337) / $1,298,329 / $2,485,115; R. Michael: $2,494,946 / $3,357,820 / $2,375,716;
L. Schumacher: $1,773,374 / $4,235,519 / $5,040,017; M. Severino: $966,311 / $1,416,157 / $1,127,049; and
J. Stewart: $1,899,249.
The changes in pension value result primarily from the following factors: (i) the effect of changes in the
actuarial assumptions AbbVie uses to calculate plan liability for financial reporting purposes; (ii) additional
pension benefit accrual under the Pension Plan and the Supplemental Pension Plan; and (iii) the impact of
the time value of money on the pension value.
Non - Qualified Defined Contribution Plan Earnings
The totals in this column include reportable interest credited under the AbbVie Performance Incentive Plan
and the AbbVie Supplemental Savings Plan.
R. Gonzalez: $780,933 / $917,110 / $889,910; L. Schumacher: $1,072,880 / $1,262,024 / $1,221,256;
M. Severino: $436,086 / $436,551 / $340,126; and J. Stewart: $276,474.
(5) The amounts shown in this column include the change in pension value during the applicable year, which is
attributable to changes in actuarial assumptions (primarily discount rate and mortality tables) and other factors
based on plan design (primarily pay, service and age).
The present value of a pension benefit is determined, in part, by the discount rate used for accounting
purposes. The discount rate is determined by reference to the prevailing market rate of interest. In 2021,
interest rates increased and the discount rates used for the Pension Plan and the Supplemental Pension Plan
were increased to reflect that change. An increase in the discount rate decreases the present value of
participants’ pension benefits while actual payments to be made to participants are not changed. The discount
rate used for 2021 was 3.25% for the Pension Plan and 3.21% for the Supplemental Pension Plan. The
discount rate used for 2020 was 3.02% for the Pension Plan and 2.94% for the Supplemental Pension Plan,
while the discount rate used for 2019 was 3.56% for the Pension Plan and 3.51% for the Supplemental
Pension Plan. The mortality assumptions that apply for actuarial purposes also affect pension values.
In addition to the effect of the changes in actuarial assumptions, other factors built into the plans contributed
to the change in pension value. The change in pension value numbers reflect the application of the benefit
formulas under the Pension Plan and the Supplemental Pension Plan, which are described in the section of
this proxy statement captioned “Pension Benefits.” As participants’ pay changes, the formulas yield revised
pension values. Furthermore, as a participant ages and service credit accumulates year over year (before the
participant is eligible for unreduced pension benefits), the present value of his or her pension benefits
increases, even without changes in pay or actuarial assumptions.
(6) The amounts shown below are reported in this column for 2021, 2020 and 2019, respectively, as applicable.
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EXECUTIVE COMPENSATION
Earnings for Non - Qualified Defined Benefit and Non - Qualified Defined Contribution Plans
R. Gonzalez: $130,314 / $212,566 / $372,310; L. Schumacher: $182,495 / $341,999 / $621,724; M. Severino:
$79,790 / $100,398 / $135,497; and J. Stewart: $46,571.
Each of the NEOs’ awards under the AbbVie Performance Incentive Plan is paid in cash to the NEO on a
current basis and, for eligible NEOs, may be deposited into a grantor trust established by the NEO, net of
maximum tax withholdings. Each of the eligible NEOs has also established grantor trusts in connection with
the AbbVie Supplemental Pension Plan and the AbbVie Supplemental Savings Plan. These amounts include
earnings net of the reportable interest included in footnote (4).
Employer Contributions to Defined Contribution Plans
R. Gonzalez: $85,000 / $84,423 / $82,500; R. Michael: $14,500 / $14,250 / $14,000; L. Schumacher: $62,408
/ $60,590 / $58,827; M. Severino: $70,552 / $68,496 / $66,500; and J. Stewart: $53,712.
These amounts include AbbVie contributions to the AbbVie Savings Plan and the AbbVie Supplemental
Savings Plan, as applicable. The Supplemental Savings Plan permits eligible NEOs to contribute amounts in
excess of the annual limit set by the Internal Revenue Code for employee contributions to 401(k) plans up to
the excess of (i) 18 percent of their base salary over (ii) the amount contributed to AbbVie’s tax - qualified
401(k) plan. AbbVie matches participant contributions at the rate of 250 percent of the first 2 percent of
compensation contributed to the plan. The eligible NEOs have these amounts paid to them in cash on a
current basis and deposited into a grantor trust established by the NEO, net of maximum tax withholdings.
Other 2021 Compensation
The totals shown in the table include the cost of providing a corporate automobile less the amount reimbursed
by the NEO: R. Gonzalez: $24,178; R. Michael: $16,418; L. Schumacher: $21,552; M. Severino: $20,684; and
J. Stewart: $18,718. AbbVie imputes income to the NEO, if required, and the NEO pays taxes in accordance
with tax regulations without gross - ups.
The totals shown in the table include a $10,000 financial planning services allowance for each NEO. AbbVie
imputes income to the NEO, if required, and the NEO pays taxes in accordance with tax regulations without
gross - ups.
The totals shown in the table include the following costs for non - business - related air travel and services:
R. Gonzalez: $564,581; R. Michael: $20,471; and L. Schumacher: $15,116. AbbVie determines the
incremental cost for flights based on the direct cost to AbbVie, including fuel costs, parking, handling and
landing fees, catering, travel fees, and other miscellaneous direct costs. AbbVie imputes income to the NEO,
if required, and the NEO pays taxes in accordance with tax regulations without gross - ups.
The NEOs also are eligible to participate in an executive disability benefit, which is described on page 62 of
this proxy statement.
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53
EXECUTIVE COMPENSATION
REQUIRED PAY RATIO DISCLOSURE
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and
Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total
compensation of our employees and the annual total compensation of our CEO, Richard Gonzalez. The pay ratio
included in this information is a reasonable estimate calculated in a manner consistent with Regulation S-K
Item 402(u). The ratio of Mr. Gonzalez’s annual total compensation for 2021, as reported in the Summary
Compensation Table in this proxy statement, to the median employee annual total compensation determined on
the same basis was 160:1. For 2021, the annual total compensation of our median employee (other than
Mr. Gonzalez) was $149,662. To identify the median employee, we prepared a list of active AbbVie employees,
including legacy Allergan employees, throughout the world as of December 31, 2021. The consistently applied
compensation measure used to identify the median employee was annual base pay and target bonus, using
hours worked during 2021 for hourly employees and base salary for the remaining employees. This process
resulted in a median group consisting of several employees and a representative employee was selected, taking
into account demographic characteristics that best represent a typical AbbVie employee, including tenure,
location, employment status and applicable compensation and benefit programs.
2021 Grants of Plan - Based Awards
The following table summarizes the equity awards granted under the AbbVie Amended and Restated 2013
Incentive Stock Program to the NEOs during 2021.
Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards(1)
Maximum
Target
($)
($)
Estimated
Future
Payouts
Under
Equity
All Other
Option
Awards:
Incentive Numbers of
Securities
Underlying
Options
(#)
Plan
Awards
Target
($)
58,534 (2)
58,534 (3)
Exercise
or Base
Price of
Option
Awards
(#)
Closing
Market
Price on
Grant
Date
Grant Date
Fair Value
of Stock
and Option
Awards
19,826 (2)
19,826 (3)
19,826 (2)
19,826 (3)
19,826 (2)
19,826 (3)
13,217 (2)
13,217 (3)
192,546 (5) $ 105.92 $ 106.06
65,217 (5) 105.92
106.06
65,217 (5) 105.92
106.06
65,217 (5) 105.92
106.06
43,478 (5) 105.92
106.06
$ 6,374,353 (4)
6,199,336 (4)
3,134,649 (6)
2,159,051 (4)
2,099,772 (4)
1,061,733 (6)
2,159,051 (4)
2,099,772 (4)
1,061,733 (6)
2,159,051 (4)
2,099,772 (4)
1,061,733 (6)
1,439,331 (4)
1,399,812 (4)
707,822 (6)
Name
R. Gonzalez
R. Michael
L. Schumacher
M. Severino
J. Stewart
Grant
Date
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
2/18/2021
(1) During 2021, each of the NEOs participated in the AbbVie Performance Incentive Plan. The annual cash
incentive award earned by the NEO in 2021 under the plan is shown in the Summary Compensation Table in
the column captioned “Non - Equity Incentive Plan Compensation.” No future pay - outs will be made with
respect to the 2021 awards under the plan. The plan is described in greater detail in the section of this proxy
statement captioned “Compensation Discussion and Analysis—Compensation Plan Elements—Short - Term
Incentives.”
(2) This is a performance share award that has the potential to vest at 0% to 250% of target during a three - year
performance period based on company performance in earnings per share (EPS) and relative total
stockholder return (TSR). TSR performance is measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid in cash at vesting only to
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| 2022 Proxy Statement
EXECUTIVE COMPENSATION
the extent that shares are earned. In 2021, AbbVie’s EPS performance resulted in the banking of the award
on February 28, 2022 at 200% of target, with vesting to be determined based on the company’s relative TSR
performance following the three - year performance period that ends December 31, 2023. The performance
metrics are described in the section of this proxy statement captioned “Compensation Discussion and
Analysis—Compensation Plan Elements—Long - Term Incentives.”
(3) This is a performance - vested restricted stock unit award that has the potential to vest at 0% to 200% of
target, in one - third increments, during a three - year performance period based on AbbVie’s return on invested
capital (ROIC) articulated as pre - set goals and measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid in cash at vesting only to
the extent that shares are earned. In 2021, AbbVie’s relative ROIC performance resulted in the vesting on
February 28, 2022 of one - third of the award at 175% of target. The performance metrics are described in the
section of this proxy statement captioned “Compensation Discussion and Analysis—Compensation Plan
Elements—Long - Term Incentives.”
(4) The grant date fair value of stock awards is generally determined by multiplying the number of shares or units
granted by the average of the high and low market prices of one share of AbbVie common stock on the award
grant date. The grant date fair value of performance shares with a TSR market condition is determined using
the Monte Carlo simulation model. In the event of a grantee’s death or disability, these awards will be deemed
earned either based on actual performance through the date of death or disability or at target, depending on
the timing of the death or disability, as set forth in the award agreement. Upon a change in control, the
treatment of these awards is determined as described in the section of this proxy statement captioned
“Potential Payments upon Termination or Change in Control—Equity Awards.”
(5) One - third of the shares of common stock covered by these options are exercisable after one year, two - thirds
after two years, and all after three years, subject to satisfaction of the service requirements set forth in the
award agreements. The options vest in the event of the grantee’s death or disability. Upon a change in
control, the treatment of these awards is determined as described in the section of this proxy statement
captioned “Potential Payments upon Termination or Change in Control—Equity Awards.” Under the AbbVie
Amended and Restated 2013 Incentive Stock Program, these options have an exercise price equal to the
average of the high and low market prices (rounded up to the next even penny) of one share of AbbVie
common stock on the date of grant. These options do not contain a replacement option feature.
(6) The grant date fair value of option awards is determined as of the option grant date using a Black - Scholes
stock option valuation model. The assumptions used to determine the grant date fair value are described in
footnote (2) to the Summary Compensation Table.
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55
EXECUTIVE COMPENSATION
2021 Outstanding Equity Awards at Fiscal Year End
The following table summarizes the outstanding AbbVie equity awards held by the NEOs at year end.
Option Awards(1)
Stock Awards
Number of
Securities
Underlying
Unexercised
Options -(#)
Exercisable Unexercisable
Number of
Securities
Underlying
Unexercised
Options -(#)
Option
Exercise
Price -($)
Market
Value of
Shares of
Option Stock That Stock That
Have Not
Number of
Shares of
Have Not
Expiration
Date Vested -(#) Vested -($) Vested -(#)
Name
R. Gonzalez
R. Michael
L. Schumacher
M. Severino
J. Stewart
87,050
127,610
119,418
76,378
-
10,140
11,420
8,030
36,345
35,461
-
100,100
45,840
45,690
38,189
-
74,309
104,480
91,990
100,100
46,320
42,990
38,189
-
27,690
21,810
26,110
16,070
17,133
16,367
-
-
-
-
-
-
- $ 61.3600 2/15/2027
-
114.3600 2/14/2028
59,709 (2)
79.0200 2/20/2029
152,754 (2)
93.5000 2/19/2030
192,546 (2) 105.9200 2/17/2031
54.8600 2/17/2026
61.3600 2/15/2027
114.3600 2/14/2028
18,172 (2)
79.0200 2/20/2029
70,921 (2)
93.5000 2/19/2030
65,217 (2) 105.9200 2/17/2031
61.3600 2/15/2027
114.3600 2/14/2028
22,845 (2)
79.0200 2/20/2029
76,377 (2)
93.5000 2/19/2030
65,217 (2) 105.9200 2/17/2031
54.4400 6/01/2024
58.8800 2/18/2025
54.8600 2/17/2026
61.3600 2/15/2027
114.3600 2/14/2028
21,495 (2)
79.0200 2/20/2029
76,377 (2)
93.5000 2/19/2030
65,217 (2) 105.9200 2/17/2031
-
58.8800 2/18/2025
-
54.8600 2/17/2026
-
61.3600 2/15/2027
-
114.3600 2/14/2028
8,567 (2)
79.0200 2/20/2029
32,732 (2)
93.5000 2/19/2030
43,478 (2) 105.9200 2/17/2031
-
-
-
-
-
(1) Except as noted, the stock options are fully vested.
56
| 2022 Proxy Statement
Equity
Incentive
Plan Awards:
Number of
Unearned
Shares
or Other
Rights That
Have Not
-
-
-
-
-
Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares
or Other
Rights That
Have Not
Vested -($)
77,617 (2) 10,509,342
99,821 (2) 13,515,763
117,068 (2) 15,851,007
-
-
23,622 (2) 3,198,419
46,345 (2) 6,275,113
39,652 (2) 5,368,881
-
-
-
29,696 (2) 4,020,838
49,910 (2) 6,757,814
39,652 (2) 5,368,881
-
-
27,941 (2) 3,783,211
49,910 (2) 6,757,814
39,652 (2) 5,368,881
-
-
-
-
-
11,136 (2) 1,507,814
21,390 (2) 2,896,206
26,434 (2) 3,579,164
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2) The vesting dates of AbbVie unexercisable stock options and unvested performance share and restricted
stock/unit awards outstanding at December 31, 2021 are as follows:
Option Awards
Stock or Unit Awards
EXECUTIVE COMPENSATION
Number of
Unexercised
Shares
Remaining
from
Original
Number of
Option
Shares
Vesting—
Date
Number of
Option
Shares
Vesting—
Date
Number of
Option Number of
Shares of
Shares
Number of
Shares of
Restricted
Stock or
Vesting— Restricted Units Vesting— Units Vesting— Units Vesting—
Date
Date
Vested 2024
Number of
Shares of
Restricted
Stock or
Number of
Shares of
Restricted
Stock or
Vested 2022
Vested 2023
Stock or
Units
Date
Date
Name
R. Gonzalez
R. Michael
Grant Vested 2022 Vested 2023 Vested 2024
59,709 59,709 - 2/21
152,754 76,377 - 2/20 76,377 - 2/20
192,546 64,182 - 2/18 64,182 - 2/18 64,182 - 2/18
18,172 18,172 - 2/21
70,921 35,461 - 2/20 35,460 - 2/20
65,217 21,739 - 2/18 21,739 - 2/18 21,739 - 2/18
L. Schumacher
22,845 22,845 - 2/21
76,377 38,189 - 2/20 38,188 - 2/20
65,217 21,739 - 2/18 21,739 - 2/18 21,739 - 2/18
M. Severino
21,495 21,495 - 2/21
76,377 38,189 - 2/20 38,188 - 2/20
65,217 21,739 - 2/18 21,739 - 2/18 21,739 - 2/18
J. Stewart
8,567
8,567 - 2/21
32,732 16,366 - 2/20 16,366 - 2/20
43,478 14,493 - 2/18 14,493 - 2/18 14,492 - 2/18
58,213
19,404
59,893
39,928
58,534
58,534
17,717
5,905
27,807
18,538
19,826
19,826
22,272
7,424
29,946
19,964
19,826
19,826
20,956
6,985
29,946
19,964
19,826
19,826
8,352
2,784
12,834
8,556
13,217
13,217
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(b)
(c)
(d)
(e)
(f)
(a)
(b)
(c)
(d)
(e)
(f)
(a) These are performance shares that remained outstanding and unvested on December 31, 2021 from an
award made on February 21, 2019. The award has the potential to vest at 0% to 250% of target during a
3 - year performance period based on company performance in earnings per share (EPS) and relative total
stockholder return (TSR). TSR performance is measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2019, AbbVie’s EPS performance resulted in the banking of the award at
200% of target, with vesting to be determined based on the company’s relative TSR performance during the
3 - year performance period that ends December 31, 2021. In 2021, AbbVie’s 3-year relative TSR performance
resulted in a final vesting on February 28, 2022 of the award at 230% of target.
(b) These are performance - vested restricted stock units that remained outstanding and unvested on
December 31, 2021, from an award made on February 21, 2019. The award has the potential to vest at 0% to
150% of target, in one - third increments, during a 3 - year performance period based on AbbVie’s return on
equity (ROE) articulated as pre - set goals and measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2021, AbbVie’s relative ROE performance resulted in the vesting on
February 28, 2022 of one - third of the award at 150% of target.
2022 Proxy Statement |
57
EXECUTIVE COMPENSATION
(c) These are performance shares that remained outstanding and unvested on December 31, 2021 from an
award made on February 20, 2020. The award has the potential to vest at 0% to 250% of target during a
3 - year performance period based on company performance in earnings per share (EPS) and relative total
stockholder return (TSR). TSR performance is measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2020, AbbVie’s EPS performance resulted in the banking of the award at
200% of target, with vesting to be determined based on the company’s relative TSR performance during the
3 - year performance period that ends December 31, 2022.
(d) These are performance - vested restricted stock units that remained outstanding and unvested on
December 31, 2021, from an award made on February 20, 2020. The award has the potential to vest at 0% to
200% of target, in one - third increments, during a 3 - year performance period based on AbbVie’s return on
invested capital (ROIC) articulated as pre - set goals and measured relative to a group made up of companies
that are constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2021, AbbVie’s relative ROIC performance resulted in the vesting on
February 28, 2022 of one - third of the award at 175% of target.
(e) These are performance shares that remained outstanding and unvested on December 31, 2021 from an
award made on February 18, 2021. The award has the potential to vest at 0% to 250% of target during a
3 - year performance period based on company performance in earnings per share (EPS) and relative total
stockholder return (TSR). TSR performance is measured relative to a group made up of companies that are
constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2021, AbbVie’s EPS performance resulted in the banking of the award at
200% of target, with vesting to be determined based on the company’s relative TSR performance during the
3 - year performance period that ends December 31, 2023.
(f) These are performance - vested restricted stock units that remained outstanding and unvested on
December 31, 2021, from an award made on February 18, 2021. The award has the potential to vest at 0% to
200% of target, in one - third increments, during a 3 - year performance period based on AbbVie’s return on
invested capital (ROIC) articulated as pre - set goals and measured relative to a group made up of companies
that are constituents in either the S&P Pharmaceutical, Biotech, and Life Science Index or the NYSE Arca
Pharmaceutical Index. Dividends accrue during the performance period and are paid at vesting only to the
extent that shares are earned. In 2021, AbbVie’s relative ROIC performance resulted in the vesting on
February 28, 2022 of one - third of the award at 175% of target.
2021 Option Exercises and Stock Vested
The following table summarizes for each NEO the number of shares acquired on the exercise of AbbVie stock
options and the number of shares acquired on the vesting of AbbVie stock awards in 2021:
Name
R. Gonzalez
R. Michael
L. Schumacher
M. Severino
J. Stewart
Option Awards
Stock Awards
Number of
Shares
Acquired On
Exercise (#)
344,213
0
181,670
0
0
Value
Realized On
Exercise ($) Vesting (#)
Number of
Shares
Acquired On
$ 19,914,668
0
13,279,318
0
0
$
167,906
31,613
65,915
65,631
28,595
Value
Realized On
Vesting ($)
18,090,192
3,405,985
7,101,682
7,071,084
3,144,250
58
| 2022 Proxy Statement
EXECUTIVE COMPENSATION
PENSION BENEFITS
During 2021, the NEOs participated in two AbbVie - sponsored defined benefit pension plans: the AbbVie Pension
Plan, a tax - qualified pension plan; and the AbbVie Supplemental Pension Plan, a non - qualified supplemental
pension plan. Except as provided in AbbVie’s change in control agreements, AbbVie does not have a policy
granting extra years of credited service under the plans. The change in control agreements are described in the
section of this proxy statement captioned “Potential Payments upon Termination or Change in Control.”
The compensation considered in determining the pensions payable to the NEOs is the compensation shown in
the “Salary” and “Non - Equity Incentive Plan Compensation” columns of the Summary Compensation Table.
PENSION PLAN
The Pension Plan is a broad - based plan that covers most AbbVie employees in the United States, age 21 or
older, and provides participants with a life annuity benefit at normal retirement equal to A plus the greater of B or
C below.
A. 1.10% of 5 - year final average earnings multiplied by years of benefit service after 2003.
B. 1.65% of 5 - year final average earnings multiplied by years of benefit service prior to 2004 (up to 20); plus
1.50% of 5 - year final average earnings multiplied by years of benefit service prior to 2004 in excess of 20 (but
no more than 15 additional years); less 0.50% of the lesser of 3 - year final average earnings (but not more
than the social security wage base in any year) or the social security covered compensation level multiplied
by years of benefit service.
C. 1.10% of 5 - year final average earnings multiplied by years of benefit service prior to 2004.
The benefit for service prior to 2004 (B or C above) is reduced for the cost of preretirement surviving spouse
benefit protection. The reduction is calculated using formulas based on age and employment status during the
period in which coverage was in effect.
Final average earnings are the average of the employee’s 60 highest - paid consecutive calendar months of
compensation (salary and non - equity incentive plan compensation). The Pension Plan covers earnings up to the
limit imposed by Internal Revenue Code Section 401(a)(17) and provides for a maximum of 35 years of benefit
service.
Participants become fully vested in their pension benefit upon the completion of five years of service. The benefit
is payable on an unreduced basis at age 65. Employees hired after 2003 who terminate employment prior to
age 55 with at least 10 years of service may choose to commence their benefits on an actuarially reduced basis
as early as age 55. Employees hired before 2004 who terminate employment prior to age 50 with at least
10 years of service may choose to commence their benefits on an actuarially reduced basis as early as age 50.
Employees hired before 2004 who terminate employment prior to age 50 with fewer than 10 years of service may
choose to commence their benefits on an actuarially reduced basis as early as age 55.
The Pension Plan offers several optional forms of payment, including certain and life annuities, joint and survivor
annuities, and level income annuities. The benefit paid under any of these options is actuarially equivalent to the
life annuity benefit produced by the formula described above.
Employees who retire from AbbVie prior to their normal retirement age may receive subsidized early retirement
benefits. Employees hired after 2003 are eligible for early retirement at age 55 with 10 years of service.
Employees hired before 2004 are eligible for early retirement at age 50 with 10 years of service or age 55 if the
employee’s age plus years of benefit service total 70 or more. Mr. Gonzalez, Mr. Michael, Ms. Schumacher and
Mr. Stewart are eligible for early retirement benefits under the plan.
2022 Proxy Statement |
59
EXECUTIVE COMPENSATION
The subsidized early retirement reductions applied to the benefit payable for service after 2003 (A above) depend
upon the participant’s age at retirement. If the participant retires after reaching age 55, the benefit is reduced
5 percent per year for each year that payments are made before age 62. If the participant retires after reaching
age 50 but prior to reaching age 55, the benefit is actuarially reduced from age 65.
The early retirement reductions applied to the benefit payable for service prior to 2004 (B and C above) depend
upon age and service at retirement:
•
In general, the 5 - year final average earnings portions of the benefit are reduced 3 percent per year for each
year that payments are made before age 62 and the 3 - year final average earnings portion of the benefit is
reduced 5 percent per year for each year that payments are made before age 62.
• Employees who participated in the plan before age 36 may elect “Special Retirement” on the last day of any
month after reaching age 55 with age plus Seniority Service points of at least 94 or “Early Special Retirement”
on the last day of any month after reaching age 55, provided their age plus Seniority Service points would
reach at least 94 before age 65. Seniority Service includes periods of employment prior to attaining the
minimum age required to participate in the plan. If Special Retirement or Early Special Retirement applies,
Seniority Service is used in place of benefit service in the formulas. The 5 - year final average earnings
portions of the benefit in B above are reduced 12/3 percent for each year between ages 59 and 62 plus
21/2 percent for each year between ages 55 and 59. The 3 - year final average earnings portion of the benefit is
reduced 5 percent per year for each year that payments are made before age 62. Benefit C is payable on an
unreduced basis at Special Retirement and is reduced 3 percent per year for each year that payments are
made before age 62, if Early Special Retirement applies.
SUPPLEMENTAL PENSION PLAN
The provisions of the Supplemental Pension Plan (which covers AbbVie employees in the United States whose
compensation exceeds certain limits under the Internal Revenue Code) are substantially the same as those of the
Pension Plan, with the following exceptions:
• Participants’ 5 - year final average earnings are calculated using the average of the 5 highest years of base
earnings and the 5 highest years of payments under AbbVie’s non - equity incentive plans.
•
• The Pension Plan does not include amounts deferred or payments received under the AbbVie Deferred
Compensation Plan in its calculation of a participant’s final average earnings. To preserve the pension
benefits of Deferred Compensation Plan participants, the Supplemental Pension Plan includes amounts
deferred by a participant under the Deferred Compensation Plan in its calculation of final average earnings.
In addition to the benefits outlined above for the Pension Plan, the NEOs are eligible for an additional
Supplemental Pension Plan benefit equal to 0.6% of 5 - year final average earnings for each year of service for
each of the first 20 years of service occurring after the participant attains age 35. The benefit is further limited
by the maximum percentage allowed under the Pension Plan under that plan’s benefit formulas (A, B and C
above). The portion of this additional benefit attributable to service before 2004 is reduced 3 percent per year
for each year that payments are made before age 60. The portion attributable to service after 2003 is reduced
5 percent per year for each year that payments are made before age 60 if the participant is at least age 55 at
early retirement. If the participant is under age 55 at retirement, the portion attributable to service after 2003 is
actuarially reduced from age 65.
• The Supplemental Pension Plan provides early retirement benefits similar to those provided under the
Pension Plan. The benefits provided to NEOs under the Supplemental Pension Plan are not, however,
reduced for the period between age 60 and age 62, unless the benefit is being actuarially reduced from
age 65. Mr. Gonzalez, Mr. Michael, Ms. Schumacher and Mr. Stewart are eligible for early retirement benefits
under the plan.
• Vested benefits accrued under the Supplemental Pension Plan may be funded through a grantor trust
established by an eligible NEO. Consistent with the distribution requirements of Internal Revenue Code
Section 409A and its regulations, an eligible NEO who became an officer prior to 2009 may have the entire
amount of his or her vested plan benefits funded through a grantor trust. An eligible NEO who became an
officer after 2008 may have only the vested benefits that accrue following the calendar year in which he or
she is first elected as an officer funded through a grantor trust.
60
| 2022 Proxy Statement
Benefits payable under the Supplemental Pension Plan are offset by the benefits payable from the Pension Plan,
calculated as if benefits under the plans commenced at the same time. The amounts paid to an eligible NEO’s
Supplemental Pension Plan grantor trust to fund plan benefits are actuarially determined. The plan is designed to
result in AbbVie paying the eligible NEO’s Supplemental Pension Plan benefits to the extent assets held in his or
her trust are insufficient.
PENSION BENEFITS TABLE
EXECUTIVE COMPENSATION
Name
R. Gonzalez
R. Michael
L. Schumacher
M. Severino
J. Stewart
Number of
Years
Credited
Service (#)
Present
Value of
Accumulated
Benefit
($)(1)
Plan Name
AbbVie Pension Plan
AbbVie Supplemental Pension Plan
AbbVie Pension Plan
AbbVie Supplemental Pension Plan
AbbVie Pension Plan
AbbVie Supplemental Pension Plan
AbbVie Pension Plan
AbbVie Supplemental Pension Plan
AbbVie Pension Plan
AbbVie Supplemental Pension Plan
35
35
29
29
31
31
8
8
30
30
$
271,433
19,736,973
984,478
9,906,798
1,561,075
24,004,662
257,475
4,929,345
1,065,502
8,459,023
Payments
During Last
Fiscal Year
($)
0
1,180,132 (2)
$
0
0
0
1,846,589 (2)
0
392,205 (2)
0
844,308 (2)
(1) AbbVie calculated these present values using: (i) a discount rate of 3.25% for the Pension Plan and a
discount rate of 3.21% for the Supplemental Pension Plan, the same discount rates it uses for Financial
Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 715 calculations for
financial reporting purposes; and (ii) each plan’s unreduced retirement age, which is age 62 under the AbbVie
Pension Plan and age 60 under the AbbVie Supplemental Pension Plan for those participants who are eligible
for early retirement benefits and age 65 under both plans for other participants. The present values shown in
the table reflect postretirement mortality, based on the FASB ASC Topic 715 assumption (the Pri-2012
Healthy Annuitant table with white collar adjustment projected fully generationally with MP2021 mortality
improvement scale), but do not include a factor for preretirement termination, mortality, or disability.
(2) During 2021, the amounts shown, less applicable tax withholdings, were distributed and deposited into the
individual grantor trusts established by the eligible NEOs and included in the NEOs’ income, as applicable.
Consistent with the distribution requirements of Internal Revenue Code Section 409A and its regulations,
vested Supplemental Pension Plan benefits, to the extent not previously funded, are distributed to the eligible
participants’ individual grantor trusts and included in their income. Amounts held in an eligible NEO’s
individual trust are expected to offset AbbVie’s obligations to him or her under the plan. Grantor trusts are
described in greater detail in the section of this proxy statement captioned “Compensation Plan Elements—
Benefits—Retirement Benefits.”
Non - Qualified Deferred Compensation
The following table summarizes Mr. Stewart’s non - qualified deferred compensation under the AbbVie Deferred
Compensation Plan. No additional contributions have been made to his account under the plan since such time
as Mr. Stewart became an officer and ceased to be eligible to contribute to the plan. None of the other NEOs has
any non - qualified deferred compensation under the plan.
Name
J. Stewart Deferred Compensation Plan
Plan Name(1)(2)
Executive
contributions
in last FY
Registrant
contributions
in last FY
Aggregate
earnings
in last FY
Aggregate
withdrawals/
distributions
($)
0
($)
0
($)(3)
1,619
($)(4)
0
Aggregate
balance at
last FYE
($)
157,947
(1) Mr. Stewart’s contributions to the Deferred Compensation Plan ceased in 2009.
2022 Proxy Statement |
61
EXECUTIVE COMPENSATION
(2) The plan permits participants to defer up to 75% of their base salary and up to 75% of their annual cash
incentives and credits a participant’s account with an amount equal to the employer matching contributions
that otherwise would have been made for the participant under AbbVie’s tax - qualified defined contribution
plan. Participants may direct the investment of their deferral accounts into one or more of several funds
chosen by the administrator, and the deferral account is credited with investment returns based on the
performance of the fund(s) selected. During 2021, the weighted average rate of return credited to the
account was 1.0% for Mr. Stewart.
The plan provides for cash distributions in either a lump sum or installments after separation from service
and permits in - service withdrawals in accordance with specific procedures. Participants make distribution
elections each year that apply to the deferrals to be made in the following calendar year, in accordance with
the requirements of Internal Revenue Code Section 409A. Participants may request withdrawals due to
financial hardship; if a hardship withdrawal is approved, it is limited to the amount needed to address the
hardship.
(3) The amounts reported in this column are not included in the Summary Compensation Table of this proxy
statement.
(4) The amounts reported in this column have not been previously reported as compensation in AbbVie’s
Summary Compensation Tables because they relate to contributions made before the applicable individual
became an NEO.
Potential Payments upon Termination or Change in Control
POTENTIAL PAYMENTS UPON TERMINATION – GENERALLY
In accordance with AbbVie’s longstanding practice, the company has not entered into employment agreements
with its NEOs. NEOs do not have any rights or entitlements to any cash termination or severance payments or
equity vesting acceleration outside of the change in control context and subsequent termination of an NEO
(double trigger), as discussed in more detail below.
The following summarizes the payments that the NEOs would have received if their employment had terminated
on December 31, 2021. Earnings would have continued to be paid for the NEO’s Performance Incentive Plan and
Supplemental Savings Plan grantor trusts, as applicable, until the trust assets were fully distributed. The amount
of these payments would depend on the trust earnings and fees and the period over which the trust assets were
distributed. Based on current earnings rates, if the trust assets were distributed over a 10 - year period, the NEOs
would receive the following average annual earnings payments over such 10 - year period: Mr. Gonzalez,
$899,304; Ms. Schumacher, $1,239,727; Dr. Severino, $560,903; and Mr. Stewart, $367,264. In addition, the
following one - time deposits would have been made under the AbbVie Supplemental Pension Plan for each of the
following NEOs, respectively: Mr. Gonzalez, $0; Mr. Michael, $1,914,740; Ms. Schumacher, $1,510,729;
Dr. Severino, $434,822; and Mr. Stewart, $1,539,761. As of December 31, 2021, Mr. Gonzalez, Mr. Michael,
Ms. Schumacher and Mr. Stewart were eligible to retire, and therefore were eligible to receive the pension
benefits previously described.
If the termination of employment had been due to disability, then the respective NEO also would have received, in
addition to AbbVie’s standard disability benefits, a monthly long - term disability benefit in the following amount:
Mr. Gonzalez, $245,438; Mr. Michael, $131,500; Ms. Schumacher, $131,943; Dr. Severino, $135,000; and
Mr. Stewart, $102,500. This long - term disability benefit would continue for up to 24 months following termination
of employment. It ends if the NEO retires, recovers, dies or ceases to meet eligibility criteria.
If the NEO’s employment had terminated due to death or disability, his or her unvested stock options, restricted
stock or unit awards and performance shares would have vested on December 31, 2021 with values as set forth
below in the subsection of this proxy statement captioned “Equity Awards.”
62
| 2022 Proxy Statement
EXECUTIVE COMPENSATION
POTENTIAL PAYMENTS UPON CHANGE IN CONTROL
AbbVie has entered into change in control agreements with its NEOs. Each change in control agreement
continues in effect until December 31, 2022, and can be renewed for successive two - year terms upon notice prior
to the expiration date. If notice of non - renewal is given, the agreement will expire on the later of the scheduled
expiration date and the one - year anniversary of the date of such notice. If no notice is given, the agreement will
expire on the one - year anniversary of the scheduled expiration date. Each agreement also automatically extends
for two years following any change in control (see below) that occurs while the agreement is in effect. As
discussed in more detail below, AbbVie’s internal policies and individual change in control agreements with its
NEOs do not and will not provide for a cash lump sum payment in excess of three times an NEO’s annual salary
and bonus.
The agreements provide that if the employee is terminated other than for cause or permanent disability or if the
employee elects to terminate employment for good reason (see below) within two years following a change in
control, he or she is entitled to receive a lump sum payment equal to three times his or her annual salary and
annual incentive (“bonus”) award (assuming for this purpose that all target performance goals have been
achieved or, if higher, based on the average bonus for the last three years), plus any unpaid bonus owing for any
completed performance period and the pro rata bonus for any current bonus period (based on the highest of the
bonus assuming achievement of target performance, the average bonus for the past three years or, in the case of
the unpaid bonus for any completed performance period, the actual bonus earned). If the employee is terminated
other than for cause or permanent disability or if the employee elects to terminate employment for good reason
during a potential change in control (see below), he or she is entitled to receive a lump sum payment of the
annual salary and bonus payments described above, except that the amount of the bonus to which the employee
is entitled will be based on the actual achievement of the applicable performance goals. If the potential change in
control becomes a “change in control event” (within the meaning of Internal Revenue Code Section 409A), the
employee will be entitled to receive the difference between the bonus amounts the officer received upon
termination during the potential change in control and the bonus amounts that would have been received had
such amounts instead been based on the higher of the employee’s target bonus or the average bonus paid to the
employee in the preceding three years.
Bonus payments include payments made under the Performance Incentive Plan. The employee also will receive
up to two years of additional employee benefits (including welfare benefits, outplacement services and tax and
financial counseling) and the value of three more years of pension accruals. If change in control - related payments
and benefits become subject to the excise tax imposed under Internal Revenue Code Section 4999, payments
under the agreement will be reduced to prevent application of the excise tax if such a reduction would leave the
employee in a better after - tax position than if the payments were not reduced and the tax applied. The
agreements also limit the conduct for which awards under AbbVie’s incentive stock programs can be terminated
and generally permit options to remain exercisable for the remainder of their term.
For purposes of the agreements, the term “change in control” includes the following events: any person becoming
the beneficial owner of AbbVie securities representing 20 percent or more of the outstanding voting power (not
including an acquisition directly from AbbVie and its affiliates); a change in the majority of the members of the
board of directors whose appointment was approved by a vote of at least two - thirds of the incumbent directors;
and the consummation of certain mergers or similar corporate transactions involving AbbVie. A “potential change
in control” under the agreements includes, among other things, AbbVie’s entry into an agreement that would
result in a change in control. Finally, the term “good reason” includes: a significant adverse change in the
employee’s position, duties, or authority; the company’s failure to pay the employee’s compensation or a
reduction in the employee’s base pay or benefits; or the relocation of the company’s principal executive offices to
a location that is more than 35 miles from the location of the offices at the time of the change in control.
If a change in control had occurred on December 31, 2021, immediately followed by one of the covered
circumstances described above, Mr. Gonzalez, Mr. Michael, Ms. Schumacher, Dr. Severino, and Mr. Stewart
would have been entitled to receive the following payments and benefits under the change in control agreements:
• Mr. Gonzalez: cash termination payments—$18,241,875; additional Supplemental Pension Plan benefits—
$1,478,833; welfare and fringe benefits—$83,346.
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63
EXECUTIVE COMPENSATION
• Mr. Michael: cash termination payments—$8,775,000; additional Supplemental Pension Plan benefits—
$5,058,394; welfare and fringe benefits—$86,643.
• Ms. Schumacher: cash termination payments—$10,674,379; additional Supplemental Pension Plan
benefits—$2,849,857; welfare and fringe benefits—$69,720.
• Dr. Severino: cash termination payments—$11,179,940; additional Supplemental Pension Plan benefits—
$5,578,246; welfare and fringe benefits—$86,948.
• Mr. Stewart: cash termination payments—$6,813,450; additional Supplemental Pension Plan benefits—
$7,367,493; welfare and fringe benefits—$85,802.
EQUITY AWARDS
The AbbVie Amended and Restated 2013 Incentive Stock Program was approved by AbbVie’s stockholders and
covers approximately 9,000 participants, including a broad group of management and professional staff.
The AbbVie Amended and Restated 2013 Incentive Stock Program provides that any unvested equity awards
granted in or after January 2013 may be assumed, converted or replaced on an equivalent basis by the surviving
company upon a change in control. If the surviving company does not do so, the vesting of the awards is
accelerated. If the surviving company does assume, convert or replace the awards on an equivalent basis, then
accelerated vesting of the awards is limited to circumstances in which, during the period from six months before
through two years after a change in control, the grantee’s employment is terminated without cause or the grantee
resigns for good reason. The terms “cause” and “good reason” have the same definitions as in the change in
control agreements.
If a change in control had occurred on December 31, 2021 and the surviving company did not assume, convert or
replace any of the awards granted in or after January 2013, or the NEO’s employment had terminated without
cause or he or she had resigned for good reason, as described above, then the unvested equity awards of the
NEOs would have vested as follows:
• Mr. Gonzalez would have vested in (i) 405,009 unvested AbbVie stock options with a value of $15,443,040,
(ii) 157,175 AbbVie restricted stock units with a value of $21,281,495, and (iii) 418,251 AbbVie performance
shares with a value of $56,631,131.
• Mr. Michael would have vested in (i) 154,310 unvested AbbVie stock options with a value of $5,918,725,
(ii) 59,130 AbbVie restricted stock units with a value of $8,006,202, and (iii) 155,866 AbbVie performance
shares with a value of $21,104,311.
• Ms. Schumacher would have vested in (i) 164,439 unvested AbbVie stock options with a value of $6,410,795,
(ii) 63,369 AbbVie restricted stock units with a value of $8,580,196 and (iii) 171,690 AbbVie performance
shares with a value of $23,246,880.
• Dr. Severino would have vested in (i) 163,089 unvested AbbVie stock options with a value of $6,334,682,
(ii) 62,711 AbbVie restricted stock units with a value of $8,491,036, and (iii) 168,664 AbbVie performance
shares with a value of $22,837,051.
• Mr. Stewart would have vested in (i) 84,777 unvested AbbVie stock options with a value of $3,136,209,
(ii) 54,096 AbbVie restricted stock units with a value of $7,324,531, and (iii) 151,835 AbbVie performance
shares with a value of $20,558,391.
The value of stock options shown is based on the excess of the closing price of one share of common stock on
December 31, 2021 over the exercise price of such options, multiplied by the number of unvested stock options
held by the NEO. The value of restricted stock units and performance shares shown is determined by multiplying
the number of units or shares that would vest as of December 31, 2021 in accordance with the applicable equity
award agreement terms and the closing price of one share of common stock on December 31, 2021.
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RATIFICATION OF ERNST & YOUNG LLP AS
ABBVIE’S INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
What am I
voting on and
how should I
vote?
You are being asked to ratify the appointment of Ernst & Young LLP to perform
independent audit services for the fiscal year ending December 31, 2022. Ernst &
Young LLP has served as our independent auditor since 2013. The board and the
audit committee believe it is in the best interests of the company and its
stockholders to retain Ernst & Young LLP as the company’s independent auditor.
The board of directors therefore recommends you vote “FOR” ratification of
the appointment of Ernst & Young LLP as AbbVie’s independent registered
public accounting firm for 2022.
The audit committee of the board of directors is directly responsible for the appointment, fees, retention and
oversight of the independent registered public accounting firm retained to audit the company’s financial
statements. On October 12, 2021, the audit committee appointed Ernst & Young LLP (the independent auditor) to
perform independent audit services for the fiscal year ending December 31, 2022. Ernst & Young LLP has served
as our independent auditor since 2013. In conjunction with the periodic mandated rotation of the audit firm’s lead
engagement partner, the chair of the audit committee would be involved in the selection of a new lead
engagement partner. Further, the audit committee will periodically consider whether there should be a regular
rotation of the independent auditor.
Although the audit committee has sole authority to appoint the independent auditor, it would like to know the
opinion of the stockholders regarding its appointment of Ernst & Young LLP for 2022. For this reason,
stockholders are being asked to ratify this appointment. If the stockholders do not ratify the appointment of
Ernst & Young LLP for 2022, the audit committee will take that fact into consideration, but may, nevertheless,
continue to retain Ernst & Young LLP. The audit committee and the board believe that the continued retention of
Ernst & Young LLP to serve as the company’s independent auditor is in the best interests of the company and its
stockholders.
Representatives of Ernst & Young LLP are expected to attend the Annual Meeting and will be given the
opportunity to make a statement if they desire to do so. They will also be available to respond to appropriate
questions.
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65
AUDIT INFORMATION
Audit Fees and Non - Audit Fees
The following table presents fees for professional audit services rendered to AbbVie by Ernst & Young LLP for the
years ended December 31, 2021 and December 31, 2020, and fees for other services rendered to AbbVie by
Ernst & Young LLP for those periods.
Audit fees:(1)
Audit related fees:(2)
Tax fees:(3)
Other fees: (4)
Total
2021
(millions)
21.7
0.5
3.6
0.4
26.2
$
$
2020
(millions)
23.7
0.4
7.6
0.5
32.1
$
$
(1) Ernst & Young LLP billed or will bill AbbVie for professional services rendered for the audit of AbbVie’s annual
financial statements, the review of AbbVie’s financial statements included in AbbVie’s quarterly reports, the
audits of AbbVie’s internal control over financial reporting, statutory and subsidiary audits required
internationally, the review of documents filed with the Securities and Exchange Commission, comfort letters,
consents and certain accounting consultations in connection with the audits.
(2) Audit related fees include audits of certain employee benefit plan financial statements, accounting
consultations in connection with proposed or pending transactions, and other audit or agreed upon
procedures required by statute or regulation not classified as audit fees.
(3) Tax fees consist principally of professional services for corporate tax compliance and tax advisory services.
(4) Other fees principally relate to financial advisory services for immaterial international affiliates and information
technology assessment services.
Policy on Audit Committee Pre - Approval of Audit and Permissible Non - Audit Services
of the Independent Registered Public Accounting Firm
The audit committee has established policies and procedures to pre - approve all audit and permissible non - audit
services performed by the independent registered public accounting firm (the independent auditor) and its related
affiliates.
Prior to engagement of the independent auditor for the next year’s audit, management will submit a schedule of
all proposed permissible services expected to be rendered during that year for each of four categories of services
to the audit committee for approval.
Prior to engagement, the audit committee pre - approves these services by category of service. The fees are
budgeted and the audit committee requires the independent auditor and management to report actual fees versus
the budget periodically by category of service. During the year, circumstances may arise when it may become
necessary to engage the independent auditor for additional services not contemplated in the original
pre - approval. In those instances, the audit committee requires specific pre - approval before engaging the
independent auditor.
The audit committee may delegate pre - approval authority to one or more of its members. The member to whom
such authority is delegated must report any pre - approval decisions to the audit committee at its next scheduled
meeting.
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AUDIT INFORMATION
Audit Committee Report
The audit committee is comprised of six non - employee members of the board of directors. Each audit committee
member meets the independence requirements of the New York Stock Exchange and Rule 10A - 3 of the
Exchange Act. The committee operates under a written charter adopted by the board of directors. Consistent with
the responsibilities set forth in its charter, the audit committee assists the board of directors in its oversight of
AbbVie’s accounting, auditing and financial reporting practices.
The audit committee has reviewed and discussed the audited financial statements contained in the 2021 Annual
Report on Form 10 - K with AbbVie’s management and its independent registered public accounting firm (the
independent auditor). Management is responsible for the preparation and integrity of AbbVie’s consolidated
financial statements. The independent auditor is responsible for performing an audit of the consolidated financial
statements and expressing an opinion on the conformity of those financial statements with accounting principles
generally accepted in the United States of America. The audit committee reviews these processes on behalf of
the board of directors. Periodically, during the year, the audit committee reviewed and discussed with AbbVie’s
management, internal auditors, and independent auditor the effectiveness of AbbVie’s internal control over
financial reporting and the overall quality of AbbVie’s financial reporting.
The audit committee has discussed with the independent auditor the matters required to be discussed by the
applicable requirements of the Public Company Accounting Oversight Board (PCAOB). In addition, the audit
committee has received the written disclosures and the letter from the independent auditor regarding its
independence required by PCAOB Ethics and Independence Rule 3526, Communications with Audit Committees
Concerning Independence, and has discussed with the independent auditor the firm’s independence. The audit
committee has also considered whether the provision of non - audit services is compatible with maintaining the
independence of the independent auditor and concluded the independent auditor’s independence has not been
impaired.
Based on the review and discussions referred to above, the audit committee recommended to the board of
directors that the audited financial statements be included in AbbVie’s Annual Report on Form 10 - K for the year
ended December 31, 2021 filed with the Securities and Exchange Commission.
Audit Committee
T. Freyman, Chair, W. Burnside, M. Meyer, E. Rapp, G. Tilton, and F. Waddell
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67
SAY ON PAY—ADVISORY VOTE ON THE APPROVAL
OF EXECUTIVE COMPENSATION
What am I
voting on and
how should I
vote?
You are being asked to approve the compensation of AbbVie’s named executive
officers described in the Executive Compensation section of this proxy statement. This
vote is non-binding. The board will take the results into account when making future
compensation decisions.
The compensation committee has thoroughly reviewed the company’s
compensation program and has determined that the pay decisions for the named
executive officers are appropriate given the company’s performance, the
executives’ contributions, and our stockholders’ interests. The board of
directors therefore recommends you vote “FOR” the approval of the named
executive officers’ compensation.
As required by Section 14A of the Exchange Act, stockholders are being asked to approve the compensation of
AbbVie’s named executive officers, as disclosed under Securities and Exchange Commission rules, including the
Compensation Discussion and Analysis, the compensation tables and related material included in this proxy
statement. The independent compensation committee of the board of directors, with the counsel of its
independent compensation consultant, has thoroughly examined AbbVie’s programs, the company’s performance
related to our industry and peer group, and market factors. The committee has determined that the specific pay
decisions for the named executive officers are appropriate given the company’s performance, the executives’
contributions, and our stockholders’ interests. We currently ask our stockholders to vote on executive
compensation on an annual basis.
While this vote is advisory and non - binding, the board of directors and the compensation committee value the
opinion of the stockholders and will review the voting results and take them into account when future
compensation decisions are made.
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MANAGEMENT PROPOSAL TO ELIMINATE
SUPERMAJORITY VOTING
What am I
voting on and
how should I
vote?
You are being asked to amend and restate the Certificate of Incorporation to remove
the supermajority voting requirement. Currently, certain amendments to the
company’s Certificate of Incorporation or By-Laws require the affirmative vote of at
least 80 percent of the outstanding shares. The proposed amendment will allow for a
regular majority to pass such amendments in the future.
The board of directors therefore recommends you vote “FOR” the management
proposal to amend and restate the Certificate of Incorporation to eliminate
supermajority voting.
Currently, AbbVie’s Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”)
provides that certain amendments to the Certificate of Incorporation or AbbVie’s Amended and Restated By - Laws
(the “By - Laws”) require the affirmative vote of shares representing no less than 80 percent of AbbVie’s
outstanding shares of stock entitled to vote generally in the election of directors. We refer to these provisions
listed below as the “Supermajority Voting Requirement.”
Specifically, Article VIII of the Certificate of Incorporation provides that any stockholder - approved alteration,
amendment, or repeal of any of the By - Law provisions listed below, or the adoption of any stockholder - approved
By - Law provision inconsistent with those By - Law provisions, must be approved pursuant to the Supermajority
Voting Requirement. The By - Law provisions covered by the Supermajority Voting Requirement are in regards to:
•
special meetings of stockholders and written consents by stockholders (Article II, Sections 2.2 and 2.12,
respectively);
• board size and tenure, classes of directors, board vacancies, and director removal (Article III, Sections 3.2,
3.3, 3.10 and 3.11, respectively);
indemnification of directors and officers (Article VII); and
•
• amendments to the By - Laws (Article X).
Article XI of the Certificate of Incorporation provides that any alteration, amendment, or repeal of any of the
provisions of the Certificate of Incorporation listed below, or the adoption of any provision inconsistent with those
provisions, must be approved pursuant to the Supermajority Voting Requirement. The provisions covered by the
Supermajority Voting Requirement are in regards to:
• board size, classes of directors, board vacancies, and director removal (Article VI, Sections 1, 2, 3 and 4,
respectively); and
• written consents by stockholders and special meetings of stockholders (Article VII, Sections 1 and 2,
respectively).
After reviewing the advantages and disadvantages of the Supermajority Voting Requirement at this time, the
board approved, and recommends that stockholders approve, the amendment and restatement of Articles VIII
and XI of the Certificate of Incorporation to remove the Supermajority Voting Requirement contained therein. If
approved, future stockholder - approved amendments to the By - Law and Certificate of Incorporation provisions
listed above will not be subject to the Supermajority Voting Requirement and will instead require the affirmative
vote of a majority of AbbVie’s outstanding shares of stock entitled to vote generally in the election of directors.
2022 Proxy Statement |
69
MANAGEMENT PROPOSAL TO ELIMINATE SUPERMAJORITY VOTING
The proposed Certificate of Amendment to the Certificate of Incorporation is attached to this proxy statement as
Appendix A, which the company would file promptly following the 2022 Annual Meeting if our stockholders
approve the amendment. The affirmative vote of the holders of 80 percent of the outstanding shares of stock
entitled to vote generally in the election of directors on the Record Date is required to approve this proposal
pursuant to the Certificate of Incorporation. The board has approved certain conforming changes to the
company’s By - Laws, contingent on the effectiveness of the proposed amendment to the Certificate of
Incorporation.
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STOCKHOLDER PROPOSALS
What am I
voting on and
how should I
vote?
Four stockholder proposals will be voted upon at the Annual Meeting if properly
presented by or on behalf of the proponent. The address and share ownership
information of each of the proponents is available upon request. The proposed
resolutions and the statements made in support thereof, as well as the board of
directors’ statements in opposition to these proposals, are presented on the following
pages. The proposal may contain assertions about AbbVie or other statements that
we believe are incorrect.
The board of directors recommends you vote “AGAINST” the proposals for the
reasons set forth following the proposals.
Stockholder Proposal on Independent Chair
The Employees’ Retirement System of Rhode Island and co - filer Vermont Pension Investment Commission have
notified AbbVie that they intend to present the following proposal at the Annual Meeting and that they own the
requisite number of AbbVie shares.
RESOLVED, AbbVie Inc. ("AbbVie" or "the Company") shareholders request the Board of Directors adopt as
policy (the "Policy"), and amend the bylaws as necessary, to require henceforth that the Chair of the Board of
Directors, whenever possible, be an independent member of the board. The Policy shall apply prospectively so as
not to violate any contractual obligations. If the board determines that a Chair who was independent when
selected is no longer independent, the board shall select a new Chair who satisfies the requirements of the policy
within a reasonable amount of time. Compliance with this policy is waived if no independent director is available
and willing to serve as Chair. This policy would be phased in for the next CEO transition.
Supporting Statement
In May 2021, the U.S. House of Representatives' Committee on Oversight and Reform published a 57-page
report which states:
"[P]rice hikes contributed to billions of dollars in corporate profits and enriched company executives while harming
American patients and taxpayers. AbbVie pursued a variety of tactics to increase drug sales while raising prices
for Americans including exploiting the patent system to extend its market monopoly, abusing orphan drug
protections to further block competition, and engaging in anticompetitive pricing practices".1
In September 2021, AbbVie investors who are alleging that the Company inflated its stock price with false or
misleading statements, had their lawsuit certified as a class action by a federal judge in Illinois.2 Those investors
are alleging that AbbVie provided physicians "classic kickbacks like cash, meals, drinks, gifts, trips, and patient
referrals to induce and reward Humira prescriptions".3
In September 2020, AbbVie settled a lawsuit with the State of California which similarly alleged that the Company
provided valuable goods and services to doctors to induce them to prescribe Humira. In the settlement, AbbVie
agreed to pay $24 million and reform its marketing practices.
The sustained public controversy and regulatory intervention which surround the Company, whether ultimately
found to be justified or not, are strong arguments for the need for continuous, effective and unconflicted board
oversight of corporate management.
The board is responsible for this oversight, but conflicts of interest may arise when one person holds both the
Chair and CEO positions. In our view, shareholders are best served by an independent board Chair who can
provide a balance of power between the CEO and the board. We believe that AbbVie's board should adopt best
practice governance policies, including having an independent board chair.
2022 Proxy Statement |
71
STOCKHOLDER PROPOSALS
While the CEO's insights and communication can and should be shared with an independently led board, the
difference, should the shareholder proposal be implemented, is that those insights will then be subjected to review
and oversight by a board led by an independent chair, rather than by a board led by the same person whose
insights are being considered.
To ensure that our board can provide rigorous oversight for AbbVie and management with greater independence
and accountability, we urge a vote FOR this shareholder proposal.
_______________________
1 https://oversight.house.gov/sites/democrats.oversight.house.gov/files/Committee%20on%20Oversight%20and%20Refor
m%20-%20AbbVie%20Staff%20Report.pdf
2 https://news.bloomberglaw.com/class-action/abbvie-investors-win-class-action-status-in-humira-kickback-case
3 https://law.justia.com/cases/federaI/district-courts/illinois/iIndce/1:2018cv06790/357309/104/
Board of Directors Statement in Opposition to the Stockholder
Proposal on Independent Chair
The board of directors recommends that stockholders vote AGAINST this proposal.
Our board of directors believes that our stockholders are best served by preserving the flexibility to
determine the appropriate leadership structure for the company in light of the circumstances at the time.
We believe the proposal would unnecessarily restrict the board’s ability to exercise its fiduciary duty to determine
the board leadership structure most appropriate for the company given the specific circumstances and leadership
needs at any particular point in time. The company’s robust governance framework ensures that board leadership
is balanced with independent participation given the extensive involvement of the lead director and his oversight.
Therefore, adopting a proposal that would limit the board’s ability to exercise decision making on the appropriate
leadership is not in stockholders’ best interests.
AbbVie’s existing leadership structure and corporate governance practices provide strong independent
oversight.
Since its inception in 2013, AbbVie has had a robust lead independent director role. The lead independent
director has significant authority and responsibilities and works directly with the Chairman and CEO, as well as
the independent directors, to ensure meaningful oversight of the board. Among other duties, our lead independent
director:
•
•
•
•
reviews and guides agenda items for board meetings;
leads the CEO succession planning process;
facilitates communication with the board and presides over regularly conducted executive sessions of the
independent directors or sessions where the chairman of the board is not present;
reviews and approves matters, such as schedule sufficiency, and, where appropriate, information provided to
other board members;
serves as the liaison between the chairman of the board and the independent directors;
•
• has the authority to call meetings of the independent directors;
•
•
leads the board’s evaluation of the CEO;
leads the annual board and committee evaluation process, including discussing evaluations with each director
individually;
• encourages effective director participation by fostering an environment of open dialogue and constructive
•
•
feedback among independent directors;
involved in selection and interviewing of new board members;
if requested by major stockholders, ensures that he or she is available for consultation and direct
communication as needed;
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STOCKHOLDER PROPOSALS
•
if required, represents independent board members externally; and
• performs such other duties as the board may determine from time to time.
AbbVie has other robust corporate governance practices designed to protect long - term shareholder value. All
directors, other than the CEO, are independent. All key committees and committee chairs are comprised
completely of independent directors. Our independent directors meet regularly in executive session, which is
presided over by the lead director. Our directors are also subject to majority voting as set forth in our By - Laws.
Other corporate governance practices, which are highlighted in our Governance Guidelines (available at
www.abbvieinvestor.com) and throughout this proxy statement, include a comprehensive board risk management
oversight process; an annual investor engagement program, reaching nearly 40% of outstanding shares; annual
say on pay votes; and proxy access.
The board periodically considers AbbVie’s leadership structure and has determined that its needs are
best met through the existing structure.
In light of the lead independent director authority and responsibilities and other corporate governance practices,
the board has determined that its current leadership structure, in which the offices of Chairman and Chief
Executive Officer are held by one individual, along with a strong and independent Lead Director, ensures the
appropriate level of oversight, independence, and responsibility is applied to all board decisions and is in the best
interests of AbbVie and its stockholders.
The board of directors recommends that you vote AGAINST the proposal.
Stockholder Proposal on Termination Pay
John Chevedden, on behalf of Kenneth Steiner, has notified AbbVie that he intends to present the following
proposal at the Annual Meeting and that Mr. Steiner owns the requisite number of AbbVie shares.
Proposal 6 – Shareholder Ratification of Termination Pay
Shareholders request that the Board seek shareholder approval of any senior manager’s new or renewed pay
package that provides for severance or termination payments with an estimated value exceeding 2.99 times the
sum of the executive’s base salary plus target short-term bonus.
“Severance or termination payments” include cash, equity or other compensation that is paid out or vests due to a
senior executive’s termination for any reason. Payments include those provided under employment agreements,
severance plans, and change-in-control clauses in long-term equity plans, but not life insurance, pension benefits,
or deferred compensation earned and vested prior to termination.
“Estimated total value” includes: lump-sum payments; payments offsetting tax liabilities; perquisites or benefits not
vested under a plan generally available to management employees; post-employment consulting fees or office
expense; and equity awards if vesting is accelerated, or a performance condition waived, due to termination.
The Board shall retain the option to seek shareholder approval after material terms are agreed upon.
Generous performance-based pay can be good but shareholder ratification of “golden parachute” severance
packages with a total cost exceeding 2.99 times base salary plus target bonus better aligns management pay with
shareholder interests.
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73
STOCKHOLDER PROPOSALS
For instance at one company if the CEO is terminated without cause, whether or not his termination follows a
change in control, he will receive an estimated $39 million in termination payments, nearly 7-times his 2019 base
salary plus short-term bonus.
It is in the best interest of ABBV shareholders to be protected from such lavish $39 million management
termination packages for one person.
This proposal topic won 58% support at the 2021 FedEx annual meeting.
Another incentive to adopt at least one good governance proposal at ABBV is that corporate governance and
shareholder rights are a disaster at ABBV.
Mr. Richard Gonzalez, Chairman and CEO, received 73 million negative votes at our 2021 annual meeting and
was still elected for a 3-year term. Mr. Gonzalez thus has no worries about his performance until 2024.
Management pay was rejected by 122 million negative votes.
Shareholders cannot elect directors for one-year terms. There are undemocratic voting requirements of 80% for
shareholders. The 80% voting requirements equal 117% vote requirements from the shares that cast ballots at
our annual meeting. Shareholders have no right to call a special shareholder meeting. Shareholders cannot act by
written consent.
Please vote yes:
Shareholder Ratification of Termination Pay – Proposal 6
Board of Directors Statement in Opposition to the Stockholder
Proposal on Termination Pay
The board of directors recommends that stockholders vote AGAINST this proposal. Given AbbVie’s responsible
executive compensation programs, existing safeguards, and robust shareholder input mechanisms, the proposal
is not only unnecessary, but would also harm AbbVie’s and its shareholders’ long-term interests.
In a competitive labor market, AbbVie needs to retain flexibility to attract and retain the talent critical to
drive our long-term strategy, and the proposal would severely diminish AbbVie’s competitiveness as an
employer.
AbbVie’s ability to attract human capital is critical to our long-term success as a company. Like other companies
of our size and in our industry, AbbVie has a large number of senior managers who are eligible for some type of
change in control protection, which provides stability and retention, particularly during turbulent times. In the
unlikely circumstance that AbbVie experiences a change of control and the employee is terminated or
experiences a constructive termination (double-trigger), his or her severance would be made up of two
components: (1) payment of one, two, or three times base salary and bonus (depending on seniority) and
(2) accelerated vesting of outstanding AbbVie equity awards.
If the proposal were adopted, it could mean that AbbVie would need to have a shareholder meeting every time the
company seeks to hire a new senior manager, renew a senior manager’s change of control agreement, or grant
any senior manager his or her annual equity award. This would be unmanageable and would effectively halt
AbbVie’s hiring, promotion, and annual compensation process. Alternatively, eliminating change of control
payments would severely hamper AbbVie’s competitiveness as an employer as such protection is consistent with
both peers and common market practice.
AbbVie’s compensation committee, which is made up entirely of independent directors, is tasked with designing
the compensation programs necessary to attract and retain top-tier talent. The proposal would limit the
committee’s discretion and take away its flexibility to tailor the company’s executive compensation programs to
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STOCKHOLDER PROPOSALS
meet the company’s needs at any given time. AbbVie already gathers significant shareholder feedback on its
compensation practices, through its annual Say on Pay vote and its extensive investor engagement outreach
program, which entails outreach to nearly 40% of outstanding shares each year. Therefore, the proposal is both
unnecessary and harmful to shareholders’ long-term interests.
The concerns raised in the proposal are not applicable to AbbVie. AbbVie does not have employment
agreements or severance agreements with any of its U.S. senior managers, and any severance or
termination pay in connection with a change in control requires a double-trigger, consistent with best
practices.
Because AbbVie does not have employment agreements or severance agreements with any of its U.S. senior
managers, the only situation where a senior manager would be entitled to a severance or termination payment is
in the unlikely event that AbbVie experiences a change of control (e.g., AbbVie is acquired by another company).
If shareholders are already voting on the acquisition leading to a change in control, they would also automatically
have the right to vote and therefore weigh in on any severance or termination payments. Examples of payments
outside the change of control context, such as those cited by the proponent, are simply inapplicable to AbbVie.
In the unlikely event of a change of control, AbbVie’s senior managers are entitled to a change of control payment
only if two conditions are met: (1) AbbVie has undergone a change of control and (2) the senior manager loses
his or her position. In other words, they are not automatically entitled to payment on any severance from a mere
change of control (i.e., the provisions are “double-trigger”). AbbVie’s compensation committee benchmarks peer
company compensation practices on an ongoing basis to ensure AbbVie’s programs remain consistent with
market practice and effective at recruiting and retaining top talent. AbbVie’s approach to senior manager
severance in connection with a change of control, like the rest of its compensation programs, are aligned with
market practice and appropriate for a company of AbbVie’s size and industry. In particular, AbbVie’s change in
control agreements do not and will not provide for a cash lump sum payment in excess of three times an
executive’s annual salary and bonus.
Further, if adopted, the proposal may have the unintended consequence of disincentivizing transactions where
equity awards are forfeited upon double-trigger termination, instead of acceleration. During a turbulent time,
these benefits are designed to avoid distraction and allow all to focus on the best interests of AbbVie and its
shareholders’ long-term interests. Adopting the proposal would therefore harm shareholders’ long-term interests.
The board of directors recommends that you vote AGAINST this proposal.
Stockholder Proposal on Report on Board Oversight of
Competition Practices
Friends Fiduciary Corporation and co - filers Trinity Health, Missionary Oblates of Mary Immaculate, Mercy
Investment Services, Inc., Sisters of Charity of St. Elizabeth, Bon Secours Mercy Health, Inc., Sisters of Charity
Blessed Virgin Mary, and CommonSpirit Health, have notified AbbVie that they intend to present the following
proposal at the Annual Meeting and that they own the requisite number of AbbVie shares.
RESOLVED that shareholders of AbbVie Inc. ("AbbVie") ask the board of directors to report to shareholders on
how it oversees risks related to anticompetitive practices, including whether the full board or board committee has
oversight responsibility, whether and how consideration of such risks is incorporated into board deliberations
regarding strategy, and the board's role in AbbVie's public policy activities related to such risks. The report should
be prepared at reasonable expense and should omit confidential or proprietary information, as well as information
about existing litigation and claims of which AbbVie has notice.
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SUPPORTING STATEMENT
The anticompetitive practices of companies within the pharmaceutical supply chain, including drug developers
such as AbbVie, are receiving increasing scrutiny from the public, regulators, and enforcers. The criticism of
AbbVie has focused on the company's establishment of "patent thickets" around its drugs to prevent generic
competition, some of which have resulted in massive price hikes for everyday consumers.i
Regulators and enforcers are increasingly focused on curbing this type of behavior. In May, then-acting
Chairwoman of the Federal Trade Commission (FTC) Rebecca Kelly Slaughter stated that "[f]or decades, the FTC
has challenged a number of illegal anticompetitive practices in the pharmaceutical industry that can lead to high
drug prices. The Commission should consider ways to build on this work by addressing emerging and evolving
practices that have the potential to harm consumers."ii Furthermore, upon confirmation, newly appointed FTC
Chair Lina Kahn directed FTC staff to ramp up investigations based on seven enforcement priorities, including
healthcare and pharmaceutical companies.iii
We are concerned over the growing risk associated with AbbVie's reliance on creating "patent thickets" and
entering "pay-for-delay" settlements. AbbVie has been scrutinized for its practices surrounding Humira and
lmbruvica, which were the subject of a 2021 drug pricing investigation and report published by the U.S. House
Committee on Oversight and Reform.vi The report details that AbbVie has applied for over 250 patents on Humira,
with 90% of these applications filed after Humira was already approved, "suggesting that they were intended to
block competition."v The report also questions whether AbbVie transferred items of value to competitors in
exchange for them staying off the market, a violation of U.S. antitrust law.vi These drugs represent nearly 55% of
AbbVie's 2020 net revenue.vii
AbbVie is facing mounting pressure related to the company's anticompetitive practices. This pressure can
increase the likelihood new regulation and increases risk for investors. Given this widespread concern and the
rapidly changing environment, we believe that robust board oversight would improve AbbVie's management of
risks related to anticompetitive practices and that shareholders would benefit from more information about the
board's role.
We therefore urge shareholders to vote FOR this proposal.
_______________________
i Overpatented, Overpriced: How Excessive Pharmaceutical Patenting is Extending Monopolies and Driving up Drug Prices, I-
MAK, 2019 (https://www.i-mak.org/wp-content/uploads/2019/01/i-mak.overpatented.overpriced.report.0801.pdf).
ii https://www.ftc.gov/pubIic-statements/2021/05/statement-acting-chairwoman-rebecca-kelly-sIaughter-regarding-federal
iii https://endpts.com/pharma-in-the-crosshairs-how-the-ftc-is-expanding-its-antitrust-powers-under-its-new-chair/
iv Drug Pricing Investigation AbbVie-Humira and lmbruvica, U.S. House of Representatives Staff Report, May 2021,
https://oversight.house.govInews/press-releases/chairwoman-maIoney-releases-staff-report-and-new-documents-showing-
abusive-drug.
v Id. at i.
vi Id. at v.
vii AbbVie 2020 Form 10-K, at 46-47 (https://investors.abbvie.com/static-files/47512e94-a9a4-4035-8dbc-6eb59116bb05).
Board of Directors Statement in Opposition to the Stockholder
Proposal on Report on Board Oversight of Competition
Practices
The board of directors recommends that stockholders vote AGAINST this proposal. Given AbbVie’s commitment
to acting ethically in all aspects of our business and the board’s existing robust oversight responsibilities, the
report requested in the proposal is unnecessary and redundant of existing oversight disclosures.
AbbVie prioritizes ethical behavior in all aspects of our business.
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Acting with Integrity is one of the five AbbVie Principles, which are foundational to who we are as a company.
This includes acting in compliance with all applicable laws and regulations, as well as conduct consistent with our
commitment to honesty, fairness, and integrity, in every aspect of our business. This commitment to acting
ethically is reinforced in numerous ways throughout our company, including in the AbbVie Code of Business
Conduct, which explicitly requires compliance with competition rules. Employees certify compliance with the
Code on an annual basis and receive annual ethics and competition training.
AbbVie’s ethical decision-making extends to our intellectual property, including our patent portfolio, which is the
result of meaningful innovation and investment in our life-changing medicines. Each year, AbbVie’s medicines
treat over 50 million people across over 60 conditions, and since our inception as an independent company in
2013, we have invested over $50 billion in research and development. The patents granted related to these
innovations undergo a rigorous review by the patent office and reflect novel innovation.
AbbVie similarly acts responsibly regarding all pricing and access decisions, ensuring that patients have access
to quality and affordable medicines. We utilize a number of strategies to ensure access, including pricing and
reimbursement models, patient assistance programs, intellectual property licensing, and product donation.
The board of directors already exercises robust oversight of AbbVie’s compliance with legal and
regulatory requirements.
As outlined in our public governance documents, the board and its committees exercise robust oversight of
AbbVie’s compliance with legal and regulatory requirements. For example, as stated elsewhere in this proxy
statement, “[t]he board has risk oversight responsibility for AbbVie and administers this responsibility both directly
and with assistance from its committees. . . . AbbVie’s risk management program focuses on issues relevant to
AbbVie’s business, reputation, and strategy, including but not limited to pipeline advancement, healthcare industry
dynamics such as pricing and patient access, manufacturing, regulatory and compliance matters, and others.”
As outlined in the public policy committee charter, the committee exercises oversight of AbbVie’s “compliance
program with respect to legal and regulatory requirements (including, but not limited to, policies related to
healthcare compliance, product quality, environmental regulations, employee health & safety and compliance with
the U.S. Foreign Corrupt Practices Act of 1977, as amended).”
Examples of this board and committee oversight include, for example, reviewing AbbVie’s intellectual property
strategy, receiving updates on certain patent settlements, and reviewing access and pricing developments,
including impact on our short- and long-term business. Given this existing oversight, as well as AbbVie’s
commitment to acting with integrity in all aspects of our business, the proposal would not add value and is
unnecessary.
The board of directors recommends that you vote AGAINST this proposal.
Stockholder Proposal on Political Spending
As You Sow, on behalf of Eliana Fishman, has notified AbbVie that they intend to present the following proposal
at the Annual Meeting and that Ms. Fishman owns the requisite number of AbbVie shares.
Whereas: The political expenditures of AbbVie Inc. appear to be misaligned with the company's publicly stated
values and vision across a number of issue areas.
AbbVie states that it believes climate change impacts human health, and has committed to joining the Science
Based Targets initiative, which supports limiting global temperature rise to no more than 1.5°C in line with the
Paris Climate Agreement.1 Yet AbbVie is a member of the U.S. Chamber of Commerce, which has consistently
lobbied to roll back U.S. climate regulation and promoted regulations that would slow the transition towards a low
carbon energy mix.
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AbbVie has stated "We are committed to equity, equality, diversity and inclusion ("EED&I"). It's fundamental to
who we are and it's just how we 'do good business."' AbbVie has also written "EED&I is good for our people and
patients, and also for our business--strengthening performance, helping us innovate and understand our
customers, and retaining the best talent."2 However, AbbVie also supported multiple trade associations that have
supported and promoted voter suppression laws.3 Further, in the 2016 - 2020 election cycles, AbbVie and its
employee PACs donated at least $1,068,050 to politicians and political organizations working to weaken women's
access to reproductive health care.
AbbVie has stated that "[W]e believe patients need access to quality and affordable medicines. Improving health
outcomes for patients around the world is one of AbbVie's corporate responsibility commitments and is integral to
our core business strategy."4 However, AbbVie contributes to ("PhRMA"), which supports numerous organizations
opposing efforts to reform drug pricing.
To minimize possible missteps and risk to the firm's reputation and brand, AbbVie should establish clear policies
and reporting on corporate electioneering and political spending that contrast with its stated healthcare, social and
environmental objectives.
Resolved: Shareholders request that AbbVie annually analyze and report, at reasonable expense, the
congruence of its political, lobbying, and electioneering expenditures during the preceding year against its publicly
stated company values and policies, listing and explaining instances of incongruent expenditures, and stating
whether the identified incongruencies have or will lead to a change in future expenditures or contributions.
Supporting Statement: Proponents recommend, at management discretion, that the report also contain an
analysis of risks to our company's brand, reputation, or shareholder value of expenditures in conflict with publicly
stated company values. "Expenditures for electioneering communications" means spending, from the corporate
treasury and from its PACs, during the year, directly or through third parties, in printed, internet, or broadcast
communications, which are reasonably susceptible to interpretation as being in support of or in opposition to a
specific candidate.
_______________________
1 https://www.abbvie.com/content/dam/abbvie-dotcom/upIoads/PDFs/societaI-impact/abbvie-esg-action-report.pdf
2 https://www.abbvie.com/our-company/equality-inclusion-diversity.html
3 https://www.politicalaccountability.net/wp-content/uploads/2021/07/Corporate-Enablers.pdf
4 https://www.abbvie.com/content/dam/abbvie-dotcom/uploads/PDFs/our-commitment-to-access-to-medicines-2.pdf
Board of Directors Statement in Opposition to the Stockholder
Proposal on Political Spending
The board of directors recommends that stockholders vote AGAINST this proposal.
AbbVie advocates on topics that advance patient access to innovative new medicines and reward
meaningful innovation. This engagement is governed by robust processes and oversight mechanisms.
As discussed in more detail on our website, AbbVie advocates on a range of issues, including advancing patient
access to innovative new medicines. This advocacy is governed by robust processes and oversight mechanisms,
including:
• The public policy committee exercises oversight of AbbVie’s political expenditures and lobbying activities,
which are further governed by the committee’s policy on political contributions. The public policy
committee and AbbVie’s senior management review these activities and expenditures on a regular basis.
• The Vice Chairman, External Affairs and Chief Legal Officer and the Vice President, Government Affairs
each review and approve all corporate political contributions to ensure these contributions are consistent
with the company’s guidelines and in accordance with applicable laws as required by the committee’s
policy on political contributions.
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• An internal Political Action Committee (PAC) Board of Directors comprised of at least twelve senior
leaders representing a broad range of functions within AbbVie guides the AbbVie PAC.
• A rigorous internal vetting process is conducted to review each political contribution.
• The Vice President, Government Affairs exercises oversight of all external vendors that lobby on AbbVie’s
behalf.
• AbbVie’s Code of Business Conduct sets forth AbbVie’s robust expectations for ethical behavior by all
employees in all aspects of our business, including political advocacy.
AbbVie understands that we may not always agree with every position a political contribution recipient takes on
the multitude of issues in which the recipient engages, but we believe it is in the best interest of AbbVie and our
patients to engage on critical policy topics, such as those that promote innovation, increase patient access to
medicine, and reduce patient out of pocket costs.
AbbVie has long been recognized as a leader for robust disclosures related to political and lobbying
activities, and we made significant additions to these disclosures in 2022.
Since our launch as a new public company in 2013, AbbVie has provided robust transparency related to our
political and lobbying activities. As a result of our extensive disclosures, AbbVie has been consistently
recognized as a leader in providing the highest level of political transparency and accountability. In 2021, AbbVie
was again recognized as a “trendsetter” in this area by the CPA-Zicklin Index, the highest ranking a company can
receive. This index, which is produced by the non-profit Center for Political Accountability in conjunction with the
Zicklin Center for Business Ethics Research at The Wharton School at the University of Pennsylvania,
benchmarks the political disclosure and accountability policies and practices of leading U.S. public companies.
AbbVie was also ranked in the top tier of companies in 2020, 2019, 2018, 2017, 2016, 2015, and 2014.
Following our robust investor dialogue throughout 2021, we further strengthened our disclosures in 2022, which
can be found at: https://www.abbvie.com/our-company/policies-disclosures.html. The changes include:
• Additional disclosures on the range of issues that AbbVie advocates on
• Significantly more detail on AbbVie’s PAC, including its leadership structure
• A description of the rigorous process used to vet all AbbVie corporate and AbbVie PAC contributions
• Lowering the threshold for disclosure of our trade association memberships from $50,000 in annual dues
to $25,000 in annual dues
• A description of how AbbVie may choose to convey concerns with any opposing positions taken by trade
associations to which we belong
• Other details, such as the annual ethics and legal training that all AbbVie federal and state government
affairs representatives receive
These updates in 2022 reflect AbbVie’s established history of enhancing our disclosures on a range of topics
incorporating shareholder and other stakeholder feedback. Given this demonstrated commitment to
transparency, the report requested in the proposal is unnecessary and would not add value.
The board of directors recommends that you vote AGAINST this proposal.
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Corporate Governance Materials
AbbVie’s corporate governance guidelines with the outline of directorship qualifications; director independence
guidelines; code of business conduct; and audit committee, compensation committee, nominations and
governance committee, and public policy committee charters are all available in the governance section of
AbbVie’s investor relations website at www.abbvieinvestor.com.
Procedures for Approval of Related Person Transactions
It is AbbVie’s policy that the nominations and governance committee conduct a reasonable prior review and
approve or disapprove of all transactions in which AbbVie participates and in which any related person has a
direct or indirect material interest if such transaction involves or is expected to involve payments of $120,000 or
more in the aggregate per fiscal year. Related person transactions requiring review by the nominations and
governance committee pursuant to this policy are identified in:
• questionnaires annually distributed to AbbVie’s directors and executive officers;
•
certifications submitted annually by AbbVie executive officers related to their compliance with AbbVie’s Code
of Business Conduct; or
communications made directly by the related person to the chief financial officer or general counsel.
•
In determining whether to approve or disapprove a related person transaction, the nominations and governance
committee will consider the following items, among others:
•
•
the related person’s relationship to AbbVie and interest in the transaction;
the material facts of the transaction, including the aggregate value of such transaction or, in the case of
indebtedness, the amount of principal involved;
the benefits to AbbVie of the transaction;
if applicable, the availability of other sources of comparable products or services;
•
•
• an assessment of whether the transaction is on terms that are comparable to the terms available to an
unrelated third party or to employees generally;
• whether a transaction has the potential to impair director independence; and
• whether the transaction constitutes a conflict of interest.
This process is included in the nominations and governance committee’s written charter, which is available on the
governance section of AbbVie’s investor relations website at www.abbvieinvestor.com.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires AbbVie’s directors and executive officers, and persons who own more
than 10% of a registered class of AbbVie’s equity securities, to file with the SEC initial reports of ownership and
reports of changes in beneficial ownership of such equity securities of AbbVie. With the exceptions of one report
filed one day late on January 5, 2022 on behalf of an executive officer reporting the withholding of shares in
connection with a restricted stock award vesting and one report filed on behalf of a director on July 2, 2021
reporting the receipt of the cash equivalent of 1,748 AbbVie stock equivalent units in connection with his
retirement from the Abbott Laboratories board of directors, each of which was not timely filed due to
administrative error, to AbbVie’s knowledge, no executive officer or director of AbbVie failed to file reports
required by Section 16(a) on a timely basis.
Performance - Based Compensation Arrangements
The Performance Incentive Plan and the Incentive Stock Program are intended to comply with Internal Revenue
Code Section 162(m) to permit deductibility of performance - based compensation with respect to awards granted
before November 2017. In connection with such awards, the compensation committee expects to take appropriate
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steps to preserve deductibility, but has the flexibility to take actions that may be based on considerations in
addition to tax deductibility. The committee believes that stockholder interests are best served by not restricting
the committee’s discretion and flexibility in crafting compensation programs, even if such programs may result in
certain non - deductible compensation expenses. Accordingly, the committee may approve components of
compensation for certain executive officers that are not deductible.
Exclusive Forum
AbbVie is incorporated in the state of Delaware and Delaware law governs the relationship among its directors,
officers, and stockholders (also known as the internal affairs doctrine). To provide for the orderly, efficient and
cost - effective resolution of Delaware - law issues affecting AbbVie, the company’s Certificate of Incorporation
provides that unless the board of directors otherwise determines, Delaware courts are the exclusive forum for
cases involving the internal affairs doctrine, derivative actions brought on behalf of the company, claims for
breach of fiduciary duty, and other matters concerning Delaware statutory and common law. The provision does
not apply to any other cases brought against AbbVie. There is uncertainty as to whether a court would enforce the
exclusive forum provision with respect to claims under the federal securities laws. The preceding paragraph is not
an exhaustive description.
Other Matters
The board of directors knows of no other business to be transacted at the 2022 Annual Meeting of Stockholders,
but if any other matters do come before the meeting, it is the intention of the persons named in the accompanying
proxy to vote or act with respect to them in accordance with their best judgment.
Date for Receipt of Stockholder Proposals for the 2023 Annual Meeting Proxy Statement
Stockholder proposals for presentation at the 2023 Annual Meeting must be received by AbbVie no later than
November 22, 2022 and must otherwise comply with the applicable requirements of the Securities and Exchange
Commission to be considered for inclusion in the proxy statement and proxy for the 2023 meeting.
Procedure for Recommendation and Nomination of Directors and Transaction of Business at Annual
Meeting
A stockholder may recommend persons as potential nominees for director by submitting the names of such
persons in writing to the secretary of AbbVie. Recommendations must be accompanied by certain information
about both the nominee and the stockholder making the nomination, as set forth in AbbVie’s Amended and
Restated By - Laws. A nominee who is recommended by a stockholder following these procedures will receive the
same consideration as other comparably qualified nominees.
A stockholder entitled to vote for the election of directors at an Annual Meeting and who is a stockholder of record
on:
•
•
•
the record date for that Annual Meeting,
the date of this proxy statement, and
the date of the Annual Meeting
may nominate persons for director, or make proposals of other business to be brought before the Annual Meeting,
by providing proper timely written notice to the secretary of AbbVie. That notice must include certain information
required by Article II of AbbVie’s Amended and Restated By - Laws, including information about the stockholder,
any beneficial owner on whose behalf the nomination or proposal is being made, their respective affiliates or
associates or others acting in concert with them, and any proposed director nominee.
For each matter the stockholder proposes to bring before the Annual Meeting, the notice must also include a brief
description of the business to be discussed, the reasons for conducting such business at the Annual Meeting, any
material interest of the stockholder in such business and certain other information specified in the By - Laws. In
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addition, in the case of a director nomination, the notice must include a completed and signed questionnaire,
representation and agreement of the nominee addressing matters specified in the By - Laws.
To be timely, written notice either to directly nominate persons for director or to bring business properly before the
Annual Meeting must be received at AbbVie’s principal executive offices not less than ninety days and not more
than one hundred twenty days prior to the anniversary date of the preceding Annual Meeting. If the Annual
Meeting is called for a date that is more than thirty days before or sixty days after such anniversary date, notice by
the stockholder must be received not less than ninety days and not more than one hundred twenty days prior to
the date of such Annual Meeting and not later than the close of business on the later of ninety days prior to the
date of such Annual Meeting, or, if the first public announcement of the date of such Annual Meeting is less than
one hundred days prior to the date of such Annual Meeting, the tenth day following the day on which public
announcement of the date of such meeting is first made by AbbVie. To be timely for the 2023 Annual Meeting,
this written notice must be received by AbbVie no later than February 6, 2023.
In addition, the notice must be updated and supplemented, if necessary, so that the information provided or
required to be provided is true and correct as of the record date for the Annual Meeting and as of the date that is
ten business days prior to the meeting. Any such update or supplement must be delivered to the secretary of
AbbVie at AbbVie’s principal executive offices not more than five business days after the record date for the
Annual Meeting, and not less than eight business days before the date of the Annual Meeting in the case of any
update or supplement required to be made as of ten business days prior to the Annual Meeting.
Procedure for Stockholder Nominations to be Included in AbbVie’s Proxy Materials
AbbVie adopted a proxy access By - Law provision to permit a stockholder, or a group of up to 20 stockholders,
continuously owning shares of our company for at least 3 years and representing an aggregate of at least 3% of
the outstanding shares of common stock, to nominate and include in our proxy materials director nominee(s)
constituting up to 25% of the total number of the directors in office, provided that the stockholder(s) and the
nominee(s) satisfy the requirements in our By - Laws. Notice must include certain information required by Article II
of AbbVie’s Amended and Restated By - Laws. To be timely, written notice must be received at AbbVie’s principal
executive offices not earlier than 150 days and not later than 120 days before the anniversary of the date that the
company mailed its proxy statement for the prior year’s annual meeting of stockholders. To be timely for the 2023
Annual Meeting, this written notice must be received by AbbVie no later than November 22, 2022 and must
include the specific information required by, and otherwise comply with the requirements of, our By - Laws.
Householding of Proxy Materials
The Securities and Exchange Commission has adopted rules that permit companies and intermediaries (such as
brokers or banks) to satisfy the delivery requirements for proxy statements with respect to two or more security
holders sharing the same address by delivering a single Notice or proxy statement addressed to those security
holders. This process, which is commonly referred to as “householding,” potentially provides extra convenience
for security holders and cost savings for companies.
Several brokers and banks with accountholders who are AbbVie stockholders will be “householding” our proxy
materials. As indicated in the notice provided by these brokers to AbbVie stockholders, a single proxy statement
will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from
an affected stockholder. Once you have received notice from your broker that it will be “householding”
communications to your address, “householding” will continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate in “householding” and you prefer to receive a
separate proxy statement, please notify your broker, or contact Broadridge Financial Solutions at
1 - 866 - 540 - 7095, or write to us at Investor Relations, AbbVie Inc., 1 North Waukegan Road, North Chicago,
Illinois 60064. Stockholders who currently receive multiple copies of the proxy statement at their address and
would like to request “householding” of their communications should contact their broker or bank.
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Cautionary Statement Regarding Forward - Looking Statements
Some statements in this proxy statement 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, among others, generally identify forward-looking statements. AbbVie cautions that these
forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially
from those indicated in the forward-looking statements. Such risks and uncertainties include, but are not limited
to, the failure to realize the expected benefits of AbbVie's acquisition of Allergan or to promptly and effectively
integrate Allergan's business, 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," of
AbbVie's 2021 Annual Report on Form 10-K, which has been filed with the Securities and Exchange Commission,
as updated by its Quarterly Reports on Form 10-Q and in other documents that AbbVie subsequently files with the
Securities and Exchange Commission that update, supplement or supersede such information. AbbVie
undertakes no obligation to release publicly any revisions to forward-looking statements as a result of subsequent
events or developments, except as required by law.
General
It is important that proxies be returned promptly. Stockholders are urged to vote, regardless of the number of
shares of AbbVie common stock owned. Stockholders may vote by telephone, by Internet, or by mail if a printed
version of the proxy card was received or requested. Stockholders who vote by telephone or the Internet do not
need to return a proxy card.
The Annual Meeting will be held on Friday, May 6, 2022 at 9:00 a.m. CT. This year’s Annual Meeting will be a
virtual meeting of stockholders. It is important to us that our stockholders be able to engage with the company and
its executives during the annual meeting. AbbVie held virtual stockholder meetings in 2020 and 2021 and
generally received positive feedback from investors. We found that more stockholders were able to attend and
our executive leadership team was able to answer more stockholder questions than in prior years, when the
company held in-person meetings. A virtual meeting allows more stockholders to attend the meeting equally and
without cost, from anywhere around the globe. At the 2022 virtual shareholder meeting, stockholders will be able
to attend the Annual Meeting, vote, and submit questions via live webcast by visiting
www.virtualshareholdermeeting.com/ ABBV2022. Consistent with prior practice at our in-person meetings, we will
address as many stockholder-submitted question topics as time permits. If we do not have time to address a
specific question, a member of our governance team will follow-up with the stockholder(s) after the meeting. The
virtual meeting website can be accessed on a computer, tablet, or phone with internet connection. For
stockholders without access to the internet, you may listen to the Annual Meeting by telephone at
1 - 877 - 328 - 2502. AbbVie will make any required list of stockholders available during the meeting. Closed
captioning will be available on the meeting platform.
On the day of the Annual Meeting, stockholders may begin to log in to the online virtual annual meeting platform
beginning at 8:45 a.m. Central Time, and the meeting will begin promptly at 9:00 a.m. Central Time. Please allow
ample time for online login. If you encounter any difficulties accessing the virtual meeting or during the meeting
time, please call 1-844-986-0822 (USA) or 1-303-562-9302 (International) for technical support.
To be admitted to the Annual Meeting at www.virtualshareholdermeeting.com/ABBV2022, you must enter the
control number found on your proxy card, voting instruction form or notice you received. You may vote during the
Annual Meeting by following the instructions available on the meeting website during the meeting.
By order of the board of directors.
LAURA J. SCHUMACHER
SECRETARY
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INFORMATION ABOUT THE ANNUAL MEETING
Who Can Vote
Stockholders of record at the close of business on March 7, 2022 will be entitled to notice of and to vote during
the Annual Meeting. As of March 7, 2022, AbbVie had 1,766,284,924 outstanding shares of common stock, which
are AbbVie’s only outstanding voting securities. Each stockholder has one vote per share. Stockholders do not
have the right to vote cumulatively in electing directors.
Notice and Access
In accordance with the Securities and Exchange Commission (SEC) e - proxy rules, AbbVie mailed a Notice of
Internet Availability of Proxy Materials (the “Notice”) to stockholders in March 2022. The Notice describes the
matters to be considered at the Annual Meeting and how stockholders can access the proxy materials online. It
also provides instructions on how stockholders can vote their shares. If you received the Notice, you will not
receive a printed version of the proxy materials unless you request one. If you would like to receive a printed
version of the proxy materials, free of charge, please follow the instructions on the Notice.
Voting by Proxy
AbbVie’s stockholders may vote their shares by telephone, the Internet, or during the Annual Meeting. If you vote
by telephone or the Internet, you do not need to return your proxy card. The instructions for voting can be found
on the Notice, on the website listed in the Notice, and, if you received one, on your proxy card. If you requested a
printed version of the proxy card, you may also vote by mail.
Revoking a Proxy
You may revoke your proxy by voting during the Annual Meeting or, at any time prior to the meeting:
• by delivering a written notice to the secretary of AbbVie,
• by delivering an authorized proxy with a later date, or
• by voting by telephone or the Internet after you have given your proxy.
Discretionary Voting Authority
Unless otherwise specified in accordance with the instructions on the proxy, the persons named in the proxy will
vote the shares of AbbVie common stock covered by proxies they receive to elect the four nominees named in
Item 1 on the proxy card. If a nominee becomes unavailable to serve, the shares will be voted for a substitute
designated by the board of directors or for fewer than four nominees if, in the judgment of the proxy holders, such
action is necessary or desirable.
Where a stockholder has specified a choice for or against the proposals to be presented at the Annual Meeting or
if the stockholder has chosen to abstain, the shares of AbbVie common stock represented by the proxy will be
voted (or not voted) as specified. Where no choice has been specified, the proxy will be voted FOR the ratification
of Ernst & Young LLP as auditors, FOR the approval of executive compensation, FOR the management proposal
to eliminate supermajority voting, and AGAINST each of the stockholder proposals.
The board of directors is not aware of any other issue that may properly be brought before the meeting. If other
matters are properly brought before the meeting, the accompanying proxy will be voted in accordance with the
judgment of the proxy holders.
Quorum and Vote Required to Approve Each Item on the Proxy
A majority of the outstanding shares entitled to vote generally in the election of directors, represented in person or
by proxy, constitutes a quorum. Directors are elected by stockholders in an uncontested election if a majority of
84
| 2022 Proxy Statement
INFORMATION ABOUT THE ANNUAL MEETING
the votes cast are “for” a director’s re - election at the Annual Meeting, excluding abstentions and broker
non - votes. For other matters, the affirmative vote of a majority of the shares represented, in person or by proxy, at
the meeting and entitled to vote on a matter shall be the act of the stockholders with respect to that matter; except
for the management proposal to eliminate supermajority voting, which requires the affirmative vote of shares
representing not less than eighty percent (80%) of the outstanding shares of capital stock of AbbVie entitled to
vote generally in the election of directors pursuant to Article XI of AbbVie’s Amended and Restated Certificate of
Incorporation.
Effect of Broker Non - Votes and Abstentions
A proxy submitted by an institution such as a broker or bank that holds shares for the account of a beneficial
owner may indicate that all or a portion of the shares represented by that proxy are not being voted with respect
to a particular matter. This could occur, for example, when the broker or bank is not permitted to vote those
shares in the absence of instructions from the beneficial owner of the stock. These “non - voted shares” will be
considered shares not present and, therefore, not entitled to vote on those matters, although these shares may be
considered present and entitled to vote for other purposes. Brokers and banks have discretionary authority to vote
shares in the absence of instructions on matters the New York Stock Exchange considers “routine,” such as the
ratification of the appointment of the auditors. They do not have discretionary authority to vote shares in absence
of instructions on “non - routine” matters. The election of directors, the advisory vote on the approval of executive
compensation, the management proposal to eliminate supermajority voting, and the stockholder proposals are
considered “non - routine” matters. Non - voted shares will not affect the determination of the outcome of the vote on
any matter to be decided at the meeting. Shares represented by proxies that are present and entitled to vote on a
matter but that have elected to abstain from voting on that matter, other than the election of directors, will have
the effect of votes against that matter.
Inspectors of Election
The inspectors of election and the tabulators of all proxies, ballots, and voting tabulations that identify
stockholders are independent and are not AbbVie employees.
Cost of Soliciting Proxies
AbbVie will bear the cost of making solicitations from its stockholders and will reimburse banks and brokerage
firms for out - of - pocket expenses incurred in connection with this solicitation. Proxies may be solicited by mail,
telephone, Internet, or in person by directors, officers, or employees of AbbVie and its subsidiaries.
AbbVie has retained Alliance Advisors LLC to aid in the solicitation of proxies, at an estimated cost of $16,000
plus reimbursement for reasonable out - of - pocket expenses.
AbbVie Savings Plan
Participants in the AbbVie Savings Plan will receive voting instructions for their shares of AbbVie common stock
held in the AbbVie Savings Plan Trust. The Trust is administered by both a trustee and an investment committee.
The trustee is Great-West Trust Company, LLC. The members of the investment committee are William H.S.
Preece, David Purdue and Michael J. Thomas, employees of AbbVie. The voting power with respect to the shares
is held by and shared between the investment committee and the participants. The investment committee must
solicit voting instructions from the participants and follow the voting instructions it receives. The investment
committee may use its own discretion with respect to those shares of AbbVie common stock for which no voting
instructions are received.
2022 Proxy Statement |
85
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Proposed Certificate of Amendment to the Amended and Restated Certificate of Incorporation of
AbbVie Inc.
The text of the proposed amendment is marked to reflect the proposed changes.
AbbVie Inc., a corporation organized and existing under and by virtue of the General Corporation Law of
the State of Delaware (the “Corporation”), does hereby certify:
1. Articles VIII and XI of AbbVie’s Amended and Restated Certificate of Incorporation are amended to read as
follows:
Appendix A
ARTICLE VIII
AMENDMENTS TO BY - LAWS
In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware, the
By - laws of the Corporation (the “By - laws”) may be altered, amended or repealed, in whole or in part, and new
By - laws may be adopted, (i) by the affirmative vote of shares representing a majority of the outstanding shares of
capital stock of the Corporation entitled to vote generally in the election of directors; provided, however, that any
proposed alteration, amendment or repeal of, or the adoption of any By - law inconsistent with, Sections 2.2, 2.12,
3.2, 3.3, 3.10 or 3.11, Article VII or Article X of the By - laws (in each case, as in effect on the date hereof), or the
alteration, amendment or repeal of, or the adoption of any provision inconsistent with this sentence, may only be
made by the affirmative vote of shares representing not less than eighty percent (80%) of the outstanding shares
of capital stock of the Corporation entitled to vote generally in the election of directors; and provided further,
however, that in the case of any such stockholder action at a meeting of stockholders, notice of the proposed
alteration, amendment, repeal or adoption of the new By - law or By - laws must be contained in the notice of such
meeting, or (ii) by action of the Board of Directors of the Corporation; provided, however, that the case of any
such action at a meeting of the Board of Directors, notice of the proposed alteration, amendment, repeal or
adoption of the new By - law or By - laws must be given not less than two days prior to the meeting.
* * *
ARTICLE XI
AMENDMENTS
The Corporation reserves the right to amend, alter or repeal any provision contained in this Amended and
Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, and all rights
conferred upon stockholders herein are subject to this reservation. In furtherance and not in limitation of the
powers conferred by the laws of the State of Delaware as they presently exist or may hereafter be amended,
subject to any limitations contained elsewhere in this Amended and Restated Certificate of Incorporation, the
Corporation may from time to time adopt, amend or repeal any provisions of this Amended and Restated
Certificate of Incorporation; provided, however, that any proposed alteration, amendment or repeal of, or the
adoption of any provision inconsistent with, Article VI and Article VII of this Amended and Restated Certificate of
Incorporation (in each case, as in effect on the date hereof), or the alteration, amendment or repeal of, or the
adoption of any provision inconsistent with this sentence, may only be made by the affirmative vote of shares
representing not less than eighty percent (80%) of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors.
2. The foregoing amendment to the Amended and Restated Certificate of Incorporation of the Corporation was
duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law.
IN WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment to the Amended and
Restated Certificate of Incorporation to be executed by the undersigned officer, duly authorized, as of the day
of 2022.
AbbVie Inc.
By:
Name:
Title:
2022 Proxy Statement |
A-1
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Appendix B
AbbVie Inc.
Reconciliation of GAAP Reported to Non - GAAP Adjusted Information
Year Ended December 31, 2021
(Unaudited) (In millions, except per share data)
Non - GAAP Financial Results
Financial results are presented on both a reported and a non - GAAP basis. Reported results were prepared in
accordance with GAAP and include all revenues and expenses recognized during the period. Non - GAAP results
adjust for certain non - cash items and for factors that are unusual or unpredictable, and exclude those costs,
expenses, and other specified items. AbbVie’s management believes non - GAAP financial measures provide
useful information to investors regarding AbbVie’s results of operations and assist management, analysts, and
investors in evaluating the performance of the business. Non - GAAP financial measures should be considered in
addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.
Business Performance Highlights Reconciliations
1. Net Revenues since 2013 Inception and Compound Annual Growth Rate
2021
2020
2019
2018
2017
2016
2015
2014
2021 -
2013
2013 CAGR
As reported
(GAAP)
Adjusted for
specified items:
As adjusted
(non - GAAP)
$ 56,197 $ 45,804 $ 33,266 $ 32,753 $ 28,216 $ 25,638 $ 22,859 $ 19,960 $ 18,790
14.7 %
(75)
(20)
—
(20)
—
(78)
(40)
(81)
—
—
$ 56,122 $ 45,784 $ 33,266 $ 32,733 $ 28,216 $ 25,560 $ 22,819 $ 19,879 $ 18,790
14.7 %
The 2021 specified revenue item represents a milestone payment received under a previously announced
collaboration. The 2020 specified revenue item represents an upfront payment received under a previously
announced legacy Allergan collaboration. The 2018 specified revenue item represents a milestone payment
received under a previously announced collaboration. The 2016 specified revenue items included milestone
revenue under previously announced collaborations and prior period royalty revenue related to a patent lawsuit
settlement. The 2015 net revenue specified item represents a milestone payment received under a previously
announced collaboration. The 2014 net revenue specified item reflects royalty income from prior periods
recognized in the fourth quarter of 2014 as a result of the settlement of a licensing arrangement.
2. Diluted Earnings Per Share Compound Annual Growth Rate and Operating Margin Expansion since 2013
Inception
Earnings Per Share
Operating Margin Expansion
As reported (GAAP)
Adjusted for specified items:
As adjusted (non - GAAP)
2021
2013
$ 6.45 $ 2.56
0.58
$ 12.70 $ 3.14
6.25
CAGR
12.2 %
19.1 %
2021 - 2013
2020
2013
2021
31.9 % 24.8 % 30.1 %
18.4 % 23.2 %
6.2 %
50.3 % 48.0 % 36.3 %
2021 - 2020 2021 - 2013
Expansion Expansion
180 bps
710 bps
(480) bps 1,220 bps
230 bps 1,400 bps
3. Net Revenues Increase over 2020
As reported (GAAP)
Adjusted for specified and other items:
Adjusted for foreign exchange:
As adjusted (non - GAAP)
Net Revenues
22.7 %
(0.1)%
(0.8)%
21.8 %
2022 Proxy Statement |
B-1
4. 2021 Gross Margin and Research & Development Expense
As reported (GAAP)
Adjusted for specified items:
As adjusted (non - GAAP)
Gross Margin
69.0 %
14.2 %
83.2 %
Research &
Development
7.1
(0.6)
6.5
$
$
5. Diluted Earnings
Per Share since 2013 Inception
As reported (GAAP)
Adjusted for specified items:
2021
2013
$ 6.45 $ 2.72 $ 5.28 $ 3.66 $ 3.30 $ 3.63 $ 3.13 $ 1.10 $ 2.56
2016
2020
2017
2018
2019
2014
2015
Intangible asset amortization
Separation costs
Milestones and other R&D expenses
Acquired IPR&D
Reata divestiture
Calico collaboration
Stemcentrx - related impairment
Charitable contribution
Acquisition related costs
Shire transaction and termination costs
Change in fair value of contingent
consideration
Restructuring(1)
Litigation matters
Intangible asset impairment
Venezuela devaluation loss
Revaluation due to Section 987 tax law
change
Impacts related to tax law changes and
audit settlements
Other
As adjusted (non - GAAP)
3.60
—
0.17
0.53
—
0.28
—
—
0.12
—
1.50
—
0.14
—
—
2.87
0.14
0.71
0.69
0.86
0.09
0.27
0.20
0.25
0.51
— — — —
0.09
0.20
— (0.20) — —
0.32 —
— —
2.66 —
—
0.56
0.18 —
— —
0.03
— — — —
0.23 —
1.81
3.43
0.39
2.14
0.31
0.10 — —
—
— (0.28)
0.18
0.18
0.15
— — —
— — — —
0.38
—
0.05
0.12
—
—
—
—
0.16
—
0.14
—
—
—
0.18
0.20
0.13
0.26
0.09
—
—
—
—
0.25
0.10
—
—
0.08
—
—
—
—
—
—
—
0.12
—
0.18
0.24
0.02
0.15
—
0.46
—
—
—
1.12
0.23
0.10
—
0.21
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(0.15)
0.06
—
0.04
$ 12.70 $ 10.56 $ 8.94 $ 7.91 $ 5.60 $ 4.82 $ 4.29 $ 3.32 $ 3.14
(1.14)
0.02
0.71
0.04
—
0.05
—
0.04
—
0.05
(0.27)
(0.49)
0.07
0.04
(1)
Except for 2019, restructuring impacts were minimal and included in the Other category.
2021 Performance Results for Financial Goals Reconciliations
Net
Revenues
56,197
Income Before
Taxes
12,989
Operating
Margin
17,924
Net
Earnings*
11,542
—
—
—
—
—
—
—
—
(75)
(637)
55,485
7,718
344
359
962
500
2,679
307
—
88
(26)
25,920
7,718
344
359
962
500
—
307
—
101
(34)
28,181
6,419
215
307
948
500
2,677
253
(265)
100
—
22,696
As reported (GAAP)
Adjusted for specified items:
Intangible asset amortization
Acquisition and integration costs
Milestones and other R&D expenses
Acquired IPR&D
Calico collaboration
Change in fair value of contingent consideration
Litigation matters
Impacts related to tax law changes and audit settlements
Other
Adjusted for foreign exchange:
As adjusted (non-GAAP)
*Represents net earnings attributable to AbbVie Inc.
B-2
| 2022 Proxy Statement
Acquisition and integration costs reflect Allergan integration costs, Soliton acquisition costs as well as
amortization of the acquisition date fair value step-up for inventory related to the Allergan acquisition partially
offset by a recovery of certain Allergan acquisition-related regulatory fees. Milestones and other R&D expenses
include milestone payments for previously announced collaborations and the purchase of FDA priority review
vouchers from third parties. Acquired IPR&D represents initial costs to acquire rights to in-process R&D projects
through R&D collaborations, licensing arrangements or other asset acquisitions. Other primarily includes
COVID - 19 related expenses, restructuring charges associated with streamlining global operations and tax related
items, offset by milestone revenue under an existing collaboration agreement.
28FEB201710025299
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2022 Proxy Statement |
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AbbVie Inc. Corporate Headquarters
Stockholder Information
1 North Waukegan Road
North Chicago, IL 60064
847.932.7900
abbvie.com
Investor Relations
Dept. ZZ05, AP34
Corporate Secretary
Dept. V364, AP34
Stock Listing
The ticker for AbbVie’s common stock is ABBV.
The principal market for the AbbVie common stock
is the NYSE. AbbVie common stock is also listed on
the Chicago Stock Exchange.
Annual Meeting
The Annual Meeting will be held on Friday, May 6,
2022, at 9 a.m. CT. Please see the proxy statement for
information about how to attend the virtual Annual
Meeting
Dividend Reinvestment Plan
The AbbVie Dividend Reinvestment Plan offers
registered stockholders an opportunity to purchase
additional shares, commission-free, through
automatic dividend reinvestment and/or optional
cash investments. Interested persons may contact
the transfer agent.
Transfer Agent
EQ Shareholder Services
P.O. Box 64874
St. Paul, MN 55164-0874
www.shareowneronline.com
877.881.5970
651.450.4064
About AbbVie
AbbVie’s mission is to discover and deliver
innovative medicines that solve serious health
issues today and address the medical challenges of
tomorrow. We strive to have a remarkable impact on
people’s lives across several key therapeutic areas:
immunology, oncology, neuroscience, eye care,
virology, women’s health and gastroenterology, in
addition to products and services across its Allergan
Aesthetics portfolio. For more information about
AbbVie, please visit us at www.abbvie.com.
Science for the health of society in 2021
Our commitment to health doesn’t stop with our medicines.
We’re committed to giving back to our communities and our wide range capabilities have
been valuable in the fight against the COVID-19 pandemic.
Launched a vaccine clinic with the
Lake County Health Department,
the Cities of North Chicago and
Waukegan, and North Chicago
Community Partners.
• Improved vaccine access for
marginalized communities by
addressing transportation and
technology barriers.
• Almost 6,000 seniors were
vaccinated, many were low-income
people and from a high-risk
population.
Encouraged employees to
volunteer at vaccine clinics in
our major U.S. locations in Illinois,
California, and Massachusetts.
• 500+ AbbVie volunteers staffed
11 clinic days at the Lake County
Fairgrounds mass vaccination
site in Illinois, contributing to over
12,000 vaccinations.
• Employees partnered with
Direct Relief and VOCES Puerto
Rico Immunization and Health
Promotion Coalition to process
4,000 vaccination records to help
the local government process
vaccination information.
• 18 employees volunteered at
Chicago’s United Center Mass
Vaccination site, contributing to
over 7,000 vaccinations.
Many AbbVie employees have
specialized skills needed to
volunteer in a pandemic, so AbbVie
established policies empowering
employees to join the fight against
COVID-19. These policies enabled
employees with relevant medical,
pharmaceutical, R&D, public health
skills and training to volunteer with
government and community efforts
and allowed volunteers to receive
full pay, benefits, and to return to
their position after their service.
Year one of our $55 million, five-year commitment to advance health and education equity
in Black and historically marginalized communities across the United States set a strong
foundation for change.
Direct Relief launched
the Fund for Health
Equity, seeded by the
AbbVie Foundation, and
awarded its first 10 grants
to community health
centers addressing health
disparities.
Providence St. Mel,
awarded 17 scholarships
and expanded programs
to help close achievement
gaps for Black students
struggling academically.
Equal Justice Initiative
reached millions with
groundbreaking reports,
films and resources
highlighting the history
of racial injustice in the
U.S. while winning legal
victories challenging
wrongful convictions and
excessive punishment.
United Negro College
Fund built the Healthcare
Workforce Diversity
Program and awarded 200
scholarships to prepare
Black professionals to
pursue healthcare careers
and drive greater equity in
health and education.
NAACP Legal Defences
and Educational Fund,
Inc. continued to battle for
civil rights, racial justice
and an inclusive society
while advocating for the
rights of Black Americans
to ensure equal access to
resources and relief.
National Urban League
expanded opportunities
for marginalized youth,
building capacity at 17 U.S.
sites and implementing a
mentorship model enabling
300 mentors to support
over 1,500 young people.
Urban Health Initiative
launched Liaisons in Care
(LinC) to promote health
equity in Chicago’s South
Side community, engaging
in over 775 patients visits,
providing education on
disease management and
food, transportation and
housing resources.
Year Up empowered over
3,000 young adults to
achieve economic mobility
and justice by providing
access to technical,
professional, and real-
world work experience
and by piloting new, virtual
opportunities for increased
participation.
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Celebrating
Our Employees
2021
Annual Report
on Form 10-K
2022
Notice of Annual
Meeting & Proxy
Statement
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Support from community and corporate partners was
essential to the COVID-19 vaccine rollout plan. In total, about
550 AbbVie volunteers contributed to 12,000 vaccinations
near AbbVie’s headquarters in Lake County, Illinois. Read
more on the inside back cover.
Frank Zhou is passionate
about investing in talent. He has
seen firsthand how AbbVie’s
Talent Philosophy results in
high-performing teams and an
environment where employees
can grow their career – including
his own journey which has taken
him to the U.S., Europe and now VP
for JAPAC in Singapore.
AbbVie is leading one of the
largest genomics research efforts
in the field with over $100 million
invested in its Genomics Research
Center since 2016. Liz Asque is
part of a highly skilled team of sci-
entists from the center working to
deliver the right medicines to
patients faster.
Scientific innovation has greatly changed
the treatment landscape for blood cancer.
Our oncology team, including employees
photographed in France during Blood Cancer
Awareness Month, continue to advance science
further and address barriers to treatment for
patients globally.
Our eye care treatments have helped manage
and preserve the vision of millions of people
worldwide. This is made possible because of
teams, like this one in Brazil, who work tirelessly
to find new ways to meet patients’ needs.
AbbVie’s seven employee resource groups
helped colleagues stay connected throughout
2021. Like our other ERG leaders, Lis Rakanovic,
co-chair of our Asian Leadership Network,
works to build community on a global scale
with a focus on networking, professional
development and talent attraction.
Sherri Carter has made it her mission to help
women and underrepresented talent grow
careers in STEM. As an associate director in our
operations group, she oversees a building and
team that manufactures critical medicine, while
doing her part to foster greater diversity and
inclusion by mentoring and nurturing talent.
AbbVie
1 North Waukegan Road,
North Chicago, IL 60064 U.S.A.
Copyright ©2022 AbbVie.
All rights reserved.
abbvie.com
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