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| Other noncurrent assets | | |
| Current portion of long-term debt | () | |
| Accounts payable and accrued liabilities | () | |
| Long-term debt | () | |
| Deferred income taxes | () | |
| Other long-term liabilities | () | |
| Total identifiable net assets | | |
| Goodwill | | |
| Total assets acquired and liabilities assumed | $ | | |
Intangible assets relate to $ billion of acquired in-process research and development (IPR&D) associated with products that have not yet received regulatory approval. 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 current portion of long-term debt assumed by AbbVie consists of $ million aggregate principal of % convertible senior notes due 2027. Upon acquisition, the convertible senior notes became callable and note holders could redeem the convertible senior notes for cash at a premium. As of the acquisition date, the convertible senior notes were recognized as current portion of long-term debt on the consolidated balance sheets at an aggregate fair value of $ million. Following the acquisition date, the company repaid the convertible senior notes and there were no amounts outstanding as of December 31, 2024.
Long-term debt assumed by AbbVie relates to funding agreements entered into by Cerevel Therapeutics prior to the acquisition. Under the agreements, Cerevel Therapeutics received funding to support development of tavapadon and agreed to repay regulatory milestones, sales milestones and royalties contingent upon approval of tavapadon by the U.S. Food and Drug Administration (FDA). The funding agreements were accounted for as financing arrangements and the fair value of the related financing liability was $ million as of the acquisition date. The estimated fair value of the financing liability was determined using a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for sales milestones and royalty payments, which are then discounted to present value. Assumptions inherent in the development of fair value include discount rates, estimated probabilities and timing of achieving milestones and estimated amounts of future sales. See Note 10 and Note 11 for additional information.
Goodwill was calculated as the excess of the consideration transferred over the fair value of net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recognized from the acquisition of Cerevel Therapeutics represents expected synergies, including the ability to: (i) expand AbbVie’s neuroscience pipeline, (ii) leverage AbbVie’s commercial, regulatory and clinical expertise to maximize Cerevel Therapeutic’s assets and (iii) enhance AbbVie’s existing neuroscience discovery capabilities. The goodwill is not deductible for tax purposes.
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| | 2024 Form 10-K |  | 64 |
billion upon achievement of certain regulatory and commercial milestones for all programs. Additionally, AbbVie will pay tiered royalties on net revenues.Following the acquisition date, the operating results of Cerevel Therapeutics have been included in the consolidated financial statements. For the period from the acquisition date through December 31, 2024, operating losses attributable to Cerevel Therapeutics were $ billion, inclusive of an intangible asset impairment charge of $ billion related to emraclidine. See Note 7 for additional information. Operating losses attributable to Cerevel Therapeutics also included $ million of cash-settled, post-closing expense for Cerevel Therapeutics employee incentive awards. AbbVie issued million RSUs to holders of Cerevel Therapeutics equity awards based on a conversion factor described in the transaction agreement. Stock compensation expense related to RSUs issued at the acquisition date was not significant.
Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ million for the year ended December 31, 2024 and were included in selling, general and administrative (SG&A) expense in the consolidated statements of earnings.
Acquisition of ImmunoGen, Inc.
On February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen. ImmunoGen is a commercial-stage biotechnology company focused on the discovery, development and commercialization of antibody-drug conjugates (ADC) for cancer patients. ImmunoGen's oncology portfolio includes its flagship cancer therapy Elahere, a first-in-class ADC approved for platinum-resistant ovarian cancer, and a pipeline of promising next-generation ADC's targeting hematologic malignancies and solid tumors. The combination accelerates AbbVie’s entry into the solid tumor space and strengthens its oncology pipeline. Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $ per share in cash. The total fair value of the consideration transferred to owners of ImmunoGen common stock was $ billion ($ billion, net of cash acquired).
The acquisition of ImmunoGen has been accounted for as a business combination using the acquisition method of accounting. The acquisition method requires, among other things, that assets acquired and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. The valuation of assets acquired and liabilities assumed was finalized during the three months ended December 31, 2024.
| | Accounts receivable | | |
| Inventories | | |
| Prepaid expenses and other current assets | | |
| Property and equipment, net | | |
| Intangible assets, net | |
| Developed product rights | | |
| License agreements | | |
| Acquired in-process research and development | | |
| Other noncurrent assets | | |
| Current portion of long-term debt | () | |
| Accounts payable and accrued liabilities | () | |
| Deferred income taxes | () | |
| Other long-term liabilities | () | |
| Total identifiable net assets | | |
| Goodwill | | |
| Total assets acquired and liabilities assumed | $ | | |
The fair value step-up adjustment to inventories of $ million was amortized to cost of products sold when the inventory was sold to customers during the year ended December 31, 2024.
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65 | | 2024 Form 10-K | | |
billion of definite-lived intangible assets and $ billion of acquired IPR&D associated with products that have not yet received regulatory approval. The acquired definite-lived intangible assets consist of developed product rights and license agreements and are being amortized over a weighted-average estimated useful life of approximately years using the estimated pattern of economic benefit. The estimated fair values of identifiable intangible assets were determined using the "income approach" which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life. Some of the more significant assumptions inherent in the development of these asset valuations include the estimated net cash flows for each year for each asset or product, the appropriate discount rate necessary to measure the risk inherent in each future cash flow stream, the life cycle of each asset, the potential regulatory and commercial success risk, competitive trends impacting the asset and each cash flow stream, as well as other factors.Other noncurrent assets primarily consist of $ million of deferred tax assets.
The current portion of long-term debt assumed by AbbVie was repaid concurrent with the acquisition at the fair value of $ million. See Note 10 for additional information.
Goodwill was calculated as the excess of the consideration transferred over the fair value of net assets recognized and represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Specifically, the goodwill recognized from the acquisition of ImmunoGen represents expected synergies including, the ability to: (i) expand AbbVie’s product portfolio as well as the potential to increase revenue from future growth platforms, (ii) accelerate AbbVie’s clinical and commercial presence in the solid tumor space within oncology, (iii) leverage the respective strengths of each company, and (iv) enhance AbbVie’s existing ADC development efforts. The goodwill is not deductible for tax purposes.
Following the acquisition date, the operating results of ImmunoGen have been included in the consolidated financial statements. For the period from the acquisition date through December 31, 2024, net revenues attributable to ImmunoGen were $ million and operating losses attributable to ImmunoGen were $ million, inclusive of $ million of cash-settled, post-closing expense for ImmunoGen employee incentive awards, $ million of inventory fair value step-up amortization and $ million of intangible asset amortization. AbbVie also issued million RSUs to holders of ImmunoGen equity awards based on a conversion factor described in the transaction agreement. Stock compensation expense related to RSUs issued at the acquisition date was not significant.
Acquisition-related expenses, which were comprised primarily of regulatory, financial advisory and legal fees, totaled $ million for the year ended December 31, 2024 and were included in SG&A expense in the consolidated statements of earnings.
Pro Forma Financial Information
| $ | | | | Net earnings | | | | |
The unaudited pro forma combined financial information was prepared using the acquisition method of accounting and was based on the historical financial information of AbbVie, ImmunoGen and Cerevel Therapeutics. In order to reflect the occurrence of the acquisitions on January 1, 2023 as required, the unaudited pro forma financial information includes adjustments to reflect incremental amortization expense to be incurred based on the 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, 2024 to the year ended December 31, 2023. The unaudited pro forma financial information is not necessarily indicative of what the consolidated results of operations would have been had the acquisitions been completed on January 1, 2023. In addition, the unaudited pro forma financial information is not a projection of future results of operations of the combined company nor does it reflect the expected realization of any synergies or cost savings associated with the acquisitions.
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| | 2024 Form 10-K | | 66 |
million was comprised of a $ million upfront cash payment and $ million for the acquisition date fair value of contingent consideration liabilities, for which AbbVie may owe up to $ million in future payments upon achievement of certain development milestones. The transaction was accounted for as a business combination using the acquisition method of accounting. As of the acquisition date, AbbVie acquired $ million of intangible assets for in-process research and development, $ million of intangible assets for developed product rights and $ million of deferred tax liabilities. Other assets and liabilities assumed were insignificant. The acquisition resulted in the recognition of $ million of goodwill which is not deductible for tax purposes.Other Licensing & Acquisitions Activity
Cash outflows related to other acquisitions and investments totaled $ billion in 2024, $ billion in 2023 and $ million in 2022. AbbVie recorded acquired IPR&D and milestones expense of $ billion in 2024, $ million in 2023 and $ million in 2022. Significant arrangements impacting 2024, 2023 and 2022, some of which require contingent milestone payments, are summarized below.
Nimble Therapeutics, Inc.
Subsequent to December 31, 2024, AbbVie completed its previously announced acquisition of Nimble Therapeutics, Inc. (Nimble). Nimble is a biotechnology company dedicated to delivering on the promise of oral peptide therapeutics and its lead asset, an investigational oral peptide IL23R inhibitor, is in preclinical development for the treatment of psoriasis. Under the terms of the agreement, AbbVie made an upfront cash payment of approximately $ million at closing to acquire all outstanding equity of Nimble. AbbVie could make additional future payments of up to $ million upon the achievement of certain development milestones. The accounting impact of this acquisition will be included in the consolidated financial statements beginning in the first quarter of 2025.
Aliada Therapeutics Holdings, Inc.
In December 2024, AbbVie completed its previously announced acquisition of Aliada Therapeutics Holdings, Inc. (Aliada) including its lead program ALIA-1758 and accounted for the transaction as an asset acquisition. ALIA-1758 is an anti-pyroglutamate amyloid beta (3pE-Aβ) antibody in development for the treatment of Alzheimer’s Disease. Under the terms of the agreement, AbbVie made an upfront cash payment of approximately $ billion to acquire all outstanding equity of Aliada which was recorded in acquired IPR&D and milestones expense in the consolidated statement of earnings in the fourth quarter of 2024.
Celsius Therapeutics, Inc.
In June 2024, AbbVie acquired Celsius Therapeutics, Inc. (Celsius Therapeutics) including its lead pipeline asset CEL383. Celsius Therapeutics is a clinical-stage biotechnology company focused on the discovery and development of precision medicine in inflammatory bowel disease. The transaction was accounted as an asset acquisition as CEL383 represented substantially all of the fair value of the gross assets acquired. The upfront payment of $ million was recorded in acquired IPR&D and milestones expense in the consolidated statement of earnings in the second quarter of 2024.
Syndesi Therapeutics SA
In February 2022, AbbVie acquired Syndesi Therapeutics SA and its portfolio of novel modulators of the synaptic vesicle protein 2A, including its lead molecule ABBV-552, previously named SDI-118, and accounted for the transaction as an asset acquisition. ABBV-552 is a small molecule, which is being evaluated to target nerve terminals to enhance synaptic efficiency. Under the terms of the agreement, AbbVie made an upfront payment of $ million which was recorded in acquired IPR&D and milestones expense in the consolidated statement of earnings in the first quarter of 2022. The agreement also includes additional future payments of up to $ million upon the achievement of certain development, regulatory and commercial milestones.
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67 | | 2024 Form 10-K | | |
million and recognized a pre-tax gain of $ million which was recorded in other operating income in the consolidated statement of earnings in the second quarter of 2022. Other Arrangements
million in 2024, $ million in 2023 and $ million in 2022. In connection with the other individually insignificant early-stage arrangements entered into in 2024, AbbVie could make additional payments of up to $ billion upon the achievement of certain development, regulatory and commercial milestones. Acquired IPR&D and milestones expense also included development milestones of $ million in 2024, $ million in 2023 and $ million in 2022
million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately % of collaboration development costs and AbbVie is responsible for the remaining % 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.
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| | 2024 Form 10-K | | 68 |
| | $ | | | | $ | | | | International - AbbVie's share of profits (included in net revenues) | | | | | | | | |
| Global - AbbVie's share of other costs (included in respective line items) | | | | | | | | |
AbbVie’s receivable from Janssen, included in accounts receivable, net, was $ million at December 31, 2024 and $ million at December 31, 2023. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $ million at December 31, 2024 and $ million at December 31, 2023.
Collaboration with Genentech, Inc.
AbbVie and Genentech, Inc. (Genentech), a member of the Roche Group, are parties to a collaboration and license agreement executed in 2007 to jointly research, develop and commercialize human therapeutic products containing BCL-2 inhibitors and certain other compound inhibitors which includes Venclexta, a BCL-2 inhibitor used to treat certain hematological malignancies. AbbVie shares equally with Genentech all pre-tax profits and losses from the development and commercialization of Venclexta in the United States. AbbVie pays royalties on Venclexta net revenues outside the United States.
AbbVie manufactures and distributes Venclexta globally and is the principal in the end-customer product sales. Sales of Venclexta are included in AbbVie's net revenues. Genentech's share of United States profits is included in AbbVie's cost of products sold. AbbVie records sales and marketing costs associated with the United States collaboration as part of SG&A expenses and global development costs as part of 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.
| | $ | | | | $ | | | | 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) | | | | | | | | |
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| | 2024 Form 10-K | | 72 |
| | $ | | | | Finance | Property and equipment, net | | | | | |
| Total lease assets | | $ | | | | $ | | |
| Liabilities | | | | |
| Operating | | | | |
| Current | Accounts payable and accrued liabilities | $ | | | | $ | | |
| Noncurrent | Other long-term liabilities | | | | | |
| Finance | | | | |
| Current | Current portion of long-term debt and finance lease obligations | | | | | |
| Noncurrent | Long-term debt and finance lease obligations | | | | | |
| Total lease liabilities | | $ | | | | $ | | |
| | $ | | | | $ | | | |
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| Short-term lease cost | | | | | | | | | |
| Variable lease cost | | | | | | | | | |
| Total lease cost | | $ | | | | $ | | | | $ | | |
In December 2022, the company entered into an agreement to sublease a portion of its Madison, New Jersey office space through the end of the original lease maturity in 2030. As a result of this agreement, the company recognized an impairment loss on its right-of-use asset of $ million and wrote-off the related leasehold improvements of $ million. These losses were recorded in SG&A expense in the consolidated statements of earnings for the year ended December 31, 2022. The company used a discounted cash flows method to value the right-of-use asset to determine the impairment amount.
Sublease income and finance lease costs were insignificant in 2024, 2023 and 2022.
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73 | | 2024 Form 10-K | | |
| | | | | Finance | | | | | |
| Weighted-average discount rate | | | | | |
| Operating | | % | | | % | | | % |
| Finance | | % | | | % | | | % |
| | $ | | | | $ | | | | Right-of-use assets obtained in exchange for new operating lease liabilities | | | | | | | | |
Finance lease cash flows were insignificant in 2024, 2023 and 2022.
| | $ | | | | $ | | | | 2026 | | | | | | | | |
| 2027 | | | | | | | | |
| 2028 | | | | | | | | |
| 2029 | | | | | | | | |
| Thereafter | | | | | | | | |
| Total lease payments | | | | | | | | |
| Less: Interest | | | | | | | | |
| Present value of lease liabilities | $ | | | | $ | | | | $ | | |
(a)
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| | 2024 Form 10-K | | 74 |
-% aggregate notes due 2024-% | | $ | | | | -% | | $ | | | | | | Floating rate term loans due 2025 | | % | | | | | | % | | | | | | |
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| Fair value hedges | | | () | | | | | () | | | | |
| Unamortized bond discounts | | | () | | | | | () | | | | |
| Unamortized deferred financing costs | | | () | | | | | () | | | | |
Unamortized bond premiums | | | | | | | | | | | | |
Financing liability | | | | | | | | | | | | |
| Other | | | | | | | | | | | | |
| Total long-term debt and finance lease obligations | | | | | | | | | | | | |
| Current portion | | | | | | | | | | | | |
| Noncurrent portion | | | $ | | | | | | $ | | | | | | (a)
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75 | | 2024 Form 10-K | | |
|
| 2026 | | |
| 2027 | | |
| 2028 | | |
| 2029 | | |
| Thereafter | | |
| Total obligations and commitments | | |
Fair value hedges, unamortized bond premiums/discounts, deferred financing costs, finance lease obligations and financing liability | | |
| Total long-term debt and finance lease obligations | $ | | |
Financing Related to ImmunoGen and Cerevel Therapeutics Acquisitions
In connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, in February 2024, the company issued $ billion aggregate principal amount of unsecured senior notes. The notes are unsecured, unsubordinated obligations of AbbVie and will rank equally in right of payment with all of AbbVie’s existing and future unsecured, unsubordinated indebtedness, liabilities and other obligations. AbbVie may redeem the fixed-rate senior notes prior to maturity at a redemption price equal to the greater of the principal amount or the sum of present values of the remaining scheduled payments of principal and interest on the fixed-rate senior notes to be redeemed plus a make-whole premium. AbbVie may also redeem the fixed-rate senior notes at par between one and six months prior to maturity. In connection with the offering, debt issuance costs incurred totaled $ million and debt discounts totaled $ 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 received from the issuance of the notes to finance the acquisition of ImmunoGen, repay its term-loan, repay commercial paper borrowings, pay fees and expenses in respect of the foregoing, finance general corporate purposes and, together with cash on hand, fund AbbVie’s acquisition of Cerevel Therapeutics. See Note 5 for additional information.
In December 2023, AbbVie entered into a $ billion 364-day bridge credit agreement and $ billion 364-day term loan credit agreement. In February 2024, AbbVie borrowed and repaid $ billion under the term loan credit agreement. Interest charged on this borrowing was based on Secured Overnight Financing Rate Reference Rate (SOFR) +% with an effective interest rate of %. Subsequent to the $ billion issuance of senior notes, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024. In February 2024, concurrent with the ImmunoGen acquisition, the company assumed and repaid an ImmunoGen senior secured term loan at a fair value of $ million.
In connection with the acquisition of Cerevel Therapeutics, the company assumed $ million aggregate principal of % convertible senior notes due 2027. Upon acquisition, the convertible senior notes became callable and note holders could redeem the convertible senior notes for cash at a premium. As of the acquisition date, the convertible senior notes were recognized as current portion of long-term debt on the consolidated balance sheets at an aggregate fair value of $ million. Following the acquisition date, the company repaid the convertible senior notes and there were no amounts outstanding as of December 31, 2024.
The company also assumed funding agreements entered into by Cerevel Therapeutics prior to the acquisition. Under the agreements, Cerevel Therapeutics received funding to support development of tavapadon and agreed to repay regulatory milestones, sales milestones and royalties contingent upon approval of tavapadon by the U.S. Food and Drug Administration (FDA). In addition, upon acquisition the company has the option to satisfy payment obligations early by making a payment equal to the amount of funding provided to Cerevel Therapeutics plus a variable premium. In all circumstances, total repayments under the funding agreements will not exceed $ million in aggregate. The funding agreements were accounted for as financing arrangements and the fair value of the related financing liability was $ million as of the acquisition date. In conjunction with the funding agreements, AbbVie also assumed security agreements entered into by
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| | 2024 Form 10-K | | 76 |
billion aggregate principal amount of % senior notes, € billion aggregate principal amount of % senior euro notes, € million aggregate principal amount of % senior euro notes and $ billion aggregate principal amount of % senior notes. During the quarter ended December 31, 2024, the company refinanced its $ billion floating rate three-year term loan. As part of the refinancing, the company repaid the existing $ billion term loan due May 2025 and borrowed $ billion under a new term loan due April 2027 at a fixed rate of %. These term notes rank equally with all other unsecured and unsubordinated indebtedness of the company. AbbVie may redeem the fixed-rate term notes between fifteen and twenty-one months at a redemption price equal to the notional amount plus one percent make whole amount and can be redeemed at par after twenty-one months. All other significant terms of the loan remained unchanged after the refinancing.In 2023, the company repaid a $ billion floating rate three-year term loan, $ million aggregate principal amount of % senior notes and $ billion aggregate principal amount of % senior notes at maturity. During the quarter ended December 31, 2023, the company also repaid € million aggregate principal amount of % senior euro notes and $ billion aggregate principal amount of % senior notes at maturity.
Short-Term Borrowings
During the twelve months ended December 31, 2024, AbbVie issued and redeemed $ billion of commercial paper. Subsequent to December 31, 2024, AbbVie issued commercial paper borrowings of which $ billion were outstanding as of date of filing of this Annual Report on Form 10-K. There were commercial paper borrowings outstanding as of December 31, 2024 and December 31, 2023. The weighted average interest rate on commercial paper borrowings was % for the twelve months ended December 31, 2024.
AbbVie currently has an existing $ billion revolving credit facility that matures in March 2028. Subsequent to December 31, 2024, in addition to the existing revolving credit facility, AbbVie entered into a new $ billion five-year revolving credit facility that matures in January 2030. The revolving credit facilities enable the company to borrow funds on an unsecured basis at variable interest rates and contain various covenants. At December 31, 2024, the company was in compliance with all covenants and commitment fees under the credit facility were insignificant. amounts were outstanding under the company's credit facilities as of December 31, 2024 and December 31, 2023.
Contingencies and Guarantees
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.
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
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77 | | 2024 Form 10-K | | |
billion at December 31, 2024 and $ billion at December 31, 2023, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than months. Accumulated gains and losses as of December 31, 2024 are reclassified from AOCI and included in cost of products sold at the time the products are sold, generally not exceeding from the date of settlement.In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $ billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was included in AOCI. This gain is reclassified to interest expense, net over the term of the related debt.
The company was a party to interest rate swap contracts designated as cash flow hedges that matured in November 2022. The effect of the hedge contracts was 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 were included in AOCI and reclassified to interest expense, net over the lives of the floating-rate debt.
In June 2023, the company entered into a cross-currency swap contract that matured in November 2023 with a notional amount totaling € million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates. The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S. dollars. The unrealized gains and losses on the contract were included in AOCI and reclassified to net foreign exchange loss over the term of the related debt.
The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated debt, trade payables, 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 gains or 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 $ billion at December 31, 2024 and $ billion at December 31, 2023.
The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of € billion at December 31, 2024 and € billion December 31, 2023. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling € billion, SEK billion, CAD million and CHF million at December 31, 2024 and € billion, SEK billion, CAD million and CHF million at December 31, 2023. The company uses the spot method of assessing hedge effectiveness for derivative instruments designated as net investment hedges. Realized and unrealized gains and losses from these hedges are included in AOCI and the initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.
The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $ billion at December 31, 2024 and $ billion at December 31, 2023. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.
amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 78 |
| $ | | | | Accounts payable and accrued liabilities | $ | | | $ | | | | |
| |
| Designated as net investment hedges | Prepaid expenses and other | | | | | | Accounts payable and accrued liabilities | | | | |
| Designated as net investment hedges | Other assets | | | | | | Other long-term liabilities | | | | |
| Not designated as hedges | Prepaid expenses and other | | | | | | Accounts payable and accrued liabilities | | | | |
| |
| |
| Interest rate swap contracts | | | | | | | |
| |
| |
| Designated as fair value hedges | Other assets | | | | | | Other long-term liabilities | | | | |
| Total derivatives | | $ | | | $ | | | | | $ | | | $ | | |
While certain derivatives are subject to netting arrangements with the company's counterparties, the company does not offset derivative assets and liabilities within the consolidated balance sheets.
| | $ | () | | | $ | | | | Designated as net investment hedges | | | | | () | | | | |
| Cross-currency swap contracts designated as cash flow hedges | | | | | () | | | | |
| Interest rate swap contracts designated as cash flow hedges | | | | | | | | | |
Assuming market rates remain constant through contract maturities, the company expects to reclassify pre-tax gains of $ million into cost of products sold for foreign currency cash flow hedges and pre-tax gains of $ 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 $ million in 2024, pre-tax losses of $ million in 2023 and pre-tax gains of $ million in 2022.
| | | | | | | | | | | |
79 | | 2024 Form 10-K | | |
| | $ | | | | $ | | | | Designated as net investment hedges | Interest expense, net | | | | | | | | |
| Not designated as hedges | Net foreign exchange loss | | | | | | | () | |
| Treasury rate lock agreements designated as cash flow hedges | Interest expense, net | | | | | | | | |
| Cross-currency swap contracts designated as cash flow hedges | Net foreign exchange loss | | | | () | | | | |
| Interest rate swap contracts | | | | | | |
| Designated as cash flow hedges | Interest expense, net | | | | | | | () | |
| Designated as fair value hedges | Interest expense, net | | | | | | | () | |
| Debt designated as hedged item in fair value hedges | Interest expense, net | () | | | () | | | | |
Fair Value Measures
The fair value hierarchy consists of the following three levels:
•Level 1—Valuations based on unadjusted quoted prices in active markets for identical assets that the company has the ability to access;
•Level 2—Valuations based on quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuations in which all significant inputs are observable in the market; and
•Level 3—Valuations using significant inputs that are unobservable in the market and include the use of judgment by the company's management about the assumptions market participants would use in pricing the asset or liability.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 80 |
| | $ | | | | $ | | | | $ | | | | Money market funds and time deposits | | | | | | | | | | | |
| Debt securities | | | | | | | | | | | |
| Equity securities | | | | | | | | | | | |
| |
| Foreign currency contracts | | | | | | | | | | | |
| |
| Total assets | $ | | | | $ | | | | $ | | | | $ | | |
| Liabilities | | | | | | | |
| Interest rate swap contracts | $ | | | | $ | | | | $ | | | | $ | | |
| Foreign currency contracts | | | | | | | | | | | |
| Financing liability | | | | | | | | | | | |
| Contingent consideration | | | | | | | | | | | |
| Total liabilities | $ | | | | $ | | | | $ | | | | $ | | |
The following table summarizes the bases used to measure certain assets and liabilities carried at fair value on a recurring basis on the consolidated balance sheet as of December 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | |
| | | Basis of fair value measurement |
| (in millions) | Total | | Quoted prices in active markets for identical assets
(Level 1) | | Significant other observable
inputs
(Level 2) | | Significant unobservable inputs
(Level 3) |
| Assets | | | | | | | |
| Cash and equivalents | $ | | | | $ | | | | $ | | | | $ | | |
| Money market funds and time deposits | | | | | | | | | | | |
| Debt securities | | | | | | | | | | | |
| Equity securities | | | | | | | | | | | |
| |
| Foreign currency contracts | | | | | | | | | | | |
| Total assets | $ | | | | $ | | | | $ | | | | $ | | |
| Liabilities | | | | | | | |
| Interest rate swap contracts | $ | | | | $ | | | | $ | | | | $ | | |
| Foreign currency contracts | | | | | | | | | | | |
| Contingent consideration | | | | | | | | | | | |
| Total liabilities | $ | | | | $ | | | | $ | | | | $ | | |
Money market funds and time deposits are valued using relevant observable market inputs including quoted prices for similar assets and interest rate curves. Equity securities primarily consist of investments for which the fair values were determined by using the published market prices per unit multiplied by the number of units held, without consideration of transaction costs. The derivatives entered into by the company were valued using observable market inputs including published interest rate curves and both forward and spot prices for foreign currencies.
The financing liability is related to funding agreements entered into by Cerevel Therapeutics prior to the acquisition and assumed by AbbVie. The funding agreements represent financial instruments that are accounted for as financing arrangements and the company elected to account for the financing liability in accordance with the fair value option, as permitted under ASC 825 Financial Instruments. The fair value measurement of the financing liability was determined based on significant unobservable inputs. Potential payments are estimated by applying a probability-weighted expected payment model for regulatory milestone payments and a Monte Carlo simulation model for sales milestones and royalty payments, which are then discounted to present value. Changes to the fair value of the financing liability can result from changes to one
| | | | | | | | | | | |
81 | | 2024 Form 10-K | | |
million in 2024. The change in fair value attributable to instrument-specific credit risk is recognized in other comprehensive loss and was not significant. 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.
% - %% | | % - % | | % | |
Probability of payment for royalties by indication(b) | % | % | | % - % | | % |
|
| Projected year of payments | - |
| | - | |
(a)
(b)% at December 31, 2023.
There have been transfers of assets or liabilities into or out of Level 3 of the fair value hierarchy. | | $ | | | | $ | | | Additions(a) | | | | | | | | |
| Change in fair value recognized in net earnings | | | | | | | | |
| Payments | () | | | () | | | () | |
| Ending balance | $ | | | | $ | | | | $ | | |
The change in fair value recognized in net earnings is recorded in other expense, net in the consolidated statements of earnings and included charges of $ billion in 2024, $ billion in 2023 and $ billion in 2022. In 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time, partially offset by higher discount rates. In 2023, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake, the passage of time and lower discount rates. In 2022, the change in fair value reflected higher estimated Skyrizi sales driven by stronger market share uptake and the passage of time, partially offset by higher discount rates.
Contingent consideration payments of amounts up to the initial acquisition date fair value are classified as cash outflows from financing activities and payments of amounts in excess of the initial acquisition date fair value are classified as cash outflows from operating activities in the consolidated statements of cash flows.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 82 |
| $ | | | | $ | | | | $ | | | | $ | | | | Long-term debt and finance lease obligations, excluding fair value hedges and financing liability | | | | | | | | | | | | | |
| Total liabilities | $ | | | $ | | | | $ | | | | $ | | | | $ | | |
| $ | | | | $ | | | | $ | | | | $ | | | | Long-term debt and finance lease obligations, excluding fair value hedges | | | | | | | | | | | | | |
| Total liabilities | $ | | | $ | | | | $ | | | | $ | | | | $ | | |
AbbVie also holds investments in equity securities that do not have readily determinable fair values. The company records these investments at cost and remeasures them to fair value based on certain observable price changes or impairment events as they occur. The carrying amount of these investments was $ million as of December 31, 2024 and $ million as of December 31, 2023. No significant cumulative upward or downward adjustments have been recorded for these investments as of December 31, 2024.
Concentrations of Risk
Of total net accounts receivable, U.S. wholesalers accounted for % as of December 31, 2024 and December 31, 2023, and substantially all of AbbVie's pharmaceutical product net revenues in the United States were to these wholesalers.
| | | | | | | | | | | |
83 | | 2024 Form 10-K | | |
| | $ | | | | $ | | | | $ | | | | Service cost | | | | | | | | | | | |
| Interest cost | | | | | | | | | | | |
| |
| |
| Actuarial (gain) loss | () | | | | | | () | | | | |
| Benefits paid | () | | | () | | | () | | | () | |
| |
| |
| Other, primarily foreign currency translation adjustments | () | | | | | | () | | | | |
| End of period | | | | | | | | | | | |
| Fair value of plan assets | | | | | | | |
| Beginning of period | | | | | | | — | | | — | |
| Actual return on plan assets | | | | | | | — | | | — | |
| Company contributions | | | | | | | | | | | |
| |
| Benefits paid | () | | | () | | | () | | | () | |
| |
| |
| 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 asset (obligation) | $ | | | | $ | | | | $ | () | | | $ | () | |
| Actuarial loss, net | $ | | | | $ | | | | $ | | | | $ | | |
| Prior service cost (credit) | | | | | | | () | | | () | |
| Accumulated other comprehensive loss (income) | $ | | | | $ | | | | $ | () | | | $ | () | |
Related to international defined benefit plans the projected benefit obligations in the table above included $ billion at December 31, 2024 and $ billion at December 31, 2023.
For plans reflected in the table above, the accumulated benefit obligations were $ billion at December 31, 2024 and $ billion at December 31, 2023.
The 2024 actuarial gain of $ million for qualified pension plans and actuarial gain of $ million for other post-employment plans were primarily driven by an increase in the discount rate. The 2023 actuarial loss of $ million for qualified pension plans and actuarial loss of $ million for other post-employment plans were primarily driven by a decrease in the discount rate and changes to experience impact and medical trends assumptions.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 84 |
| | $ | | | | Fair value of plan assets | | | | | |
| | $ | | | | Fair value of plan assets | | | | | |
Amounts Recognized in Other Comprehensive Income (Loss)
) | | $ | () | | | $ | () | | |
| Amortization of prior service cost | | | | () | | | () | |
| Amortization of actuarial loss | () | | | () | | | () | |
| Foreign exchange loss (gain) and other | | | | () | | | | |
| Total gain | $ | () | | | $ | () | | | $ | () | |
| Other post-employment plans | | | | | |
| Actuarial loss (gain) | $ | () | | | $ | | | | $ | () | |
| Prior service credit | | | | | | | () | |
| Amortization of prior service credit | | | | | | | | |
| Amortization of actuarial loss | () | | | () | | | () | |
| Total loss (gain) | $ | () | | | $ | | | | $ | () | |
| | $ | | | | $ | | | | Interest cost | | | | | | | | |
| Expected return on plan assets | () | | | () | | | () | |
| Amortization of prior service cost | | | | | | | | |
| Amortization of actuarial loss | | | | | | | | |
| Net periodic benefit cost (credit) | $ | | | | $ | () | | | $ | | |
| Other post-employment plans | | | | | |
| Service cost | $ | | | | $ | | | | $ | | |
| Interest cost | | | | | | | | |
| Amortization of prior service credit | () | | | () | | | () | |
| Amortization of actuarial loss | | | | | | | | |
| Net periodic benefit cost | $ | | | | $ | | | | $ | | |
The components of net periodic benefit cost other than service cost are included in other expense, net in the consolidated statements of earnings.
| | | | | | | | | | | |
85 | | 2024 Form 10-K | | |
% | | | % | | Rate of compensation increases | | % | | | % |
| Cash balance interest crediting rate | | % | | | % |
| Other post-employment plans | | | |
| Discount rate | | % | | | % |
The assumptions used in calculating the December 31, 2024 measurement date benefit obligations will be used in the calculation of net periodic benefit cost in 2025.
% | | | % | | | % | | 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 | | % | | | % | | | % |
For the December 31, 2024 post-retirement health care obligations remeasurement, the company assumed a % pre-65 (% 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 % (% post-65) in 2033 and remain at that level thereafter. For purposes of measuring the 2024 post-retirement health care costs, the company assumed a % pre-65 (% 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 % (% post-65) for 2032 and remain at that level thereafter.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 86 |
| | $ | | | | $ | | | | $ | | | 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) | | | | | | | | | | | |
| |
Other(f) | | | | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
| Total assets measured at NAV | | | | | | | | |
| Fair value of plan assets | $ | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Basis of fair value measurement |
| as of December 31 (in millions) | 2023 | | Quoted prices in active markets for identical assets
(Level 1) | | Significant other observable inputs
(Level 2) | | Significant unobservable inputs
(Level 3) |
| 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) | | | | | | | | | | | |
| |
Other(f) | | | | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | | | $ | | |
| Total assets measured at NAV | | | | | | | | |
| Fair value of plan assets | $ | | | | | | | | |
(a)
(b)
(c)
(d)
(e)
(f)
| | | | | | | | | | | |
87 | | 2024 Form 10-K | | |
% in equity securities, % in fixed income securities and % 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.
| | $ | | | | 2026 | | | | | |
| 2027 | | | | | |
| 2028 | | | | | |
| 2029 | | | | | |
| 2030 to 2034 | | | | | |
Defined Contribution Plan
AbbVie maintains defined contribution savings plans for the benefit of its eligible employees. The expense recognized for these plans was $ million in 2024, $ million in 2023 and $ million in 2022. 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.
million shares of AbbVie common stock have been reserved for issuance as awards to AbbVie employees. 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 or older and have at least years of service.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 88 |
| | $ | | | | $ | | | | Research and development | | | | | | | | |
| Selling, general and administrative | | | | | | | | |
| Pre-tax compensation expense | | | | | | | | |
| Tax benefit | | | | | | | | |
| After-tax compensation expense | $ | | | | $ | | | | $ | | |
Realized excess tax benefits associated with stock-based compensation totaled $ million in 2024, $ million in 2023 and $ million in 2022.
| Research and development | | | | |
| Selling, general and administrative | | | | |
| | |
| | |
|
) ))) ) | | | | $ | () | |
Other comprehensive income (loss) for 2024 included pension and post-employment benefit plan gains of $ million primarily due to actuarial gains driven by higher discount rates. Other comprehensive income (loss) for 2024 also included foreign currency translation adjustments totaling losses of $ billion principally due to the impact of the weakening of the Euro on the translation of the company's Euro-denominated assets and the offsetting impact of net investment hedging activities totaling gains of $ million. Other comprehensive income (loss) for 2023 included foreign currency translation adjustments totaling gains of $ million principally due to the impact of the strengthening of the Euro on the translation of the company’s Euro-denominated assets and the offsetting impact of net investment hedging activities totaling losses of $ million. Other comprehensive income for 2022 included pension and post-employment benefit plan gains of $ billion primarily due to actuarial gains driven by higher discount rates partially offset by losses on plan assets. Other comprehensive income (loss) for 2022 also included foreign currency translation adjustments totaling losses of $ million principally due to the impact of the weakening of the Euro on the translation of the company's Euro-denominated assets and the offsetting impact of net investment hedging activities totaling gains of $ million.
| | | | | | | | | | | |
91 | | 2024 Form 10-K | | |
) | | $ | () | | | $ | () | | | Tax expense | | | | | | | | |
| Total reclassifications, net of tax | $ | () | | | $ | () | | | $ | () | |
| Pension and post-employment benefits | | | | | |
Amortization of actuarial losses (gains) and other(b) | $ | | | | $ | () | | | $ | | |
| Tax benefit | () | | | | | | () | |
| Total reclassifications, net of tax | $ | | | | $ | () | | | $ | | |
| Cash flow hedging activities | | | | | |
Gains on foreign currency forward exchange contracts(c) | $ | () | | | $ | () | | | $ | () | |
Gains on treasury rate lock agreements(a) | () | | | () | | | () | |
Losses on interest rate swap contracts(a) | | | | | | | | |
Losses on cross-currency swap contracts(d) | | | | | | | | |
| Tax expense | | | | | | | | |
| Total reclassifications, net of tax | $ | () | | | $ | () | | | $ | () | |
(a)
(b)
(c)
Other
In addition to common stock, AbbVie's authorized capital includes million shares of preferred stock, par value $. As of December 31, 2024, shares of preferred stock were issued or outstanding.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 92 |
) | | $ | () | | | $ | () | | | Foreign | | | | | | | | |
| Total earnings before income tax expense | $ | | | | $ | | | | $ | | |
) | | $ | | | | $ | | | | Foreign | | | | | | | | |
| Total current taxes | $ | | | | $ | | | | $ | | |
| Deferred | | | | | |
| Domestic | $ | () | | | $ | () | | | $ | () | |
| Foreign | () | | | () | | | () | |
| Total deferred taxes | $ | () | | | $ | () | | | $ | () | |
| Total income tax expense (benefit) | $ | () | | | $ | | | | $ | | |
% | | | % | | | % | | Effect of foreign operations | | | | | | | () | |
| U.S. tax credits | () | | | () | | | () | |
| Stock-based compensation | () | | | () | | | () | |
| Non-deductible expenses | | | | | | | | |
| Tax law changes and related structuring | () | | | () | | | () | |
| Tax audits, settlements and reserves | () | | | () | | | | |
| Acquisition costs | | | | | | | | |
| All other, net | () | | | | | | | |
| Effective tax rate | () | % | | | % | | | % |
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 and business development activities. The effective income tax rates in 2024, 2023 and 2022 differed from the statutory tax rate principally due to the impact of foreign operations with lower income tax rates in locations outside the United States, the U.S. global minimum tax, changes in fair value of contingent consideration, tax audits and settlements, tax credits and incentives in the United States, Puerto Rico and other foreign tax jurisdictions, and business development activities. The effective income tax rate in 2024 was lower than prior periods due to the resolutions of various tax positions pertaining to multiple prior tax years, including the closing of U.S. IRS examinations covering three tax years, partially offset by increases in unrecognized tax benefits pertaining to prior years. The lower effective income tax rate in 2024 also reflects an increase due to acquisition costs related to certain business development activities and a decrease related to changes in fair value of contingent consideration. The effective income tax rate in 2023 was higher than prior periods due to increased changes in fair value of contingent consideration, intangible asset impairments and the impacts of the transition from the Puerto Rico excise tax to an income tax.
In 2022, Puerto Rico enacted Act 52-2022 (the Puerto Rico Act) allowing for a transition from a Puerto Rico excise tax levied on gross inventory purchases to an income-based tax beginning in 2023. The company completed the transition requirements of the Puerto Rico Act in 2022, resulting in the remeasurement of certain deferred tax assets and liabilities
| | | | | | | | | | | |
93 | | 2024 Form 10-K | | |
million.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 U.S. global 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.
| | $ | | | | Accruals and reserves | | | | | |
| Chargebacks and rebates | | | | | |
| Advance payments | | | | | |
| Net operating losses and other 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 assets | $ | | | | $ | | |
The decrease in deferred tax assets is primarily related to a decrease in compensation, employee benefits and advance payments. The increase in deferred tax liabilities is primarily due to the acquisition of Cerevel Therapeutics and ImmunoGen in which the company recorded the excess of book basis over tax basis of intangible assets, offset by amortization and impairment of intangible assets.
The company had valuation allowances of $ billion as of December 31, 2024 and $ billion as of December 31, 2023. These were principally related to foreign and state net operating losses and other credit carryforwards that are not expected to be realized.
The company incurred carryforward deductions in a foreign jurisdiction where realization of the future income tax benefit was, in previous reporting periods, considered so remote that the income tax benefit was not recognized as a deferred tax asset. In 2024, the company concluded that the future income tax benefit of the carryforward balances is no longer remote and therefore, a deferred tax asset was recognized. The company also recognized an offsetting valuation allowance, resulting in no net impact to deferred tax assets as such carryforward balances are not expected to be realized in the foreseeable future.
As of December 31, 2024, the company had U.S. federal, state and foreign credit carryforwards of $ million as well as U.S. federal, state and foreign net operating loss carryforwards of $ billion, which will expire at various times through 2044. The company also had foreign loss carryforwards of $ billion that have no expiration.
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 distributions) to be permanent in duration. The unrecognized tax liability is not practicable to determine.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 94 |
| | $ | | | | $ | | | |
| Increase due to current year tax positions | | | | | | | | |
| Increase due to prior year tax positions | | | | | | | | |
| Decrease due to prior year tax positions | () | | | () | | | () | |
| Settlements | () | | | () | | | () | |
| Increase due to acquisitions | | | | | | | | |
| Lapse of statutes of limitations | () | | | () | | | () | |
| Ending balance | $ | | | | $ | | | | $ | | |
If recognized, the net amount of potential tax benefits that would impact the company's effective tax rate is $ billion in 2024 and $ billion in 2023. 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.
AbbVie recognizes interest and penalties related to income tax matters in income tax expense in the consolidated statements of earnings. AbbVie recognized a gross income tax benefit of $ million in 2024 and gross income tax expense of $ million in 2023 and $ million in 2022 for interest and penalties related to income tax matters. AbbVie had an accrual for the payment of gross interest and penalties of $ billion at December 31, 2024, $ billion at December 31, 2023 and $ billion at December 31, 2022.
million in connection with statute of limitation expirations. The company has various federal, state and foreign examinations ongoing. Finalizing examinations with the relevant taxing authorities can include formal administrative and legal proceedings, and as a result, we cannot reasonably estimate the timing of resolution for certain unrecognized tax benefits. All significant federal, state and international tax matters have been concluded for years before 2009. The company believes adequate provision has been made for all income tax uncertainties.
billion as of December 31, 2024 and $ billion as of December 31, 2023. For litigation matters discussed below for which a loss is probable or reasonably possible, the company is unable to estimate the possible loss or range of loss, if any, beyond the amounts accrued. Initiation of new legal proceedings or a change in the status of existing proceedings may result in a change in the estimated loss accrued by AbbVie. While it is not feasible to predict the outcome of all proceedings and exposures with certainty, management believes that their ultimate disposition should not have a material adverse effect on AbbVie’s consolidated financial position, results of operations or cash flows.Subject to certain exceptions specified in the separation agreement by and between Abbott Laboratories (Abbott) and AbbVie, AbbVie assumed the liability for, and control of, all pending and threatened legal matters related to its business, including liabilities for any claims or legal proceedings related to products that had been part of its business, but were discontinued prior to the distribution, as well as assumed or retained liabilities, and will indemnify Abbott for any liability arising out of or resulting from such assumed legal matters.
Antitrust Litigation
Lawsuits are pending against AbbVie and others generally alleging that the 2005 patent litigation settlement involving Niaspan entered into between Kos Pharmaceuticals, Inc. (a company acquired by Abbott in 2006 and presently a subsidiary of AbbVie) and a generic company violated federal and state antitrust laws and state unfair and deceptive trade practices and unjust enrichment laws. Plaintiffs generally seek monetary damages and/or injunctive relief and attorneys' fees. The lawsuits pending in federal court consist of individual plaintiff lawsuits and a certified class action by Niaspan direct purchasers. The cases are pending in the United States District Court for the Eastern District of Pennsylvania for coordinated or consolidated
| | | | | | | | | | | |
95 | | 2024 Form 10-K | | |
lawsuits are pending against Allergan in federal and state courts. Most of the federal court lawsuits are consolidated for pre-trial purposes in the United States District Court for the Northern District of Ohio under the MDL rules as In re: National Prescription Opiate Litigation, MDL No. 2804. Approximately of the lawsuits are pending in various state courts. The plaintiffs in these lawsuits, which include states, counties, cities, other municipal entities, Native American tribes, union trust funds and other third-party payors, private hospitals and personal injury claimants, generally seek compensatory and punitive damages. Of these approximately lawsuits, approximately of them are brought by states, counties, cities, and other municipal entities, approximately of which are in the process of being dismissed pursuant to the previously announced settlement. Another approximately of the approximately lawsuits are covered by a proposed class settlement between Allergan and a class of acute care hospitals, which is subject to court approval and other contingencies.In March 2023, AbbVie Inc. filed a petition in the United States Tax Court, AbbVie Inc. and Subsidiaries v. Commissioner of Internal Revenue. The petition disputes the Internal Revenue Service determination concerning a $ million income tax benefit recorded in 2014 related to a payment made to a third party for the termination of a proposed business combination.
Shareholder and Securities Litigation
In October 2018, a federal securities lawsuit, Holwill v. AbbVie Inc., et al., was filed in the United States District Court for the Northern District of Illinois against AbbVie, its chief executive officer and former chief financial officer, alleging that reasons stated for Humira sales growth in financial filings between 2013 and 2018 were misleading because they omitted alleged misconduct in connection with Humira patient and reimbursement support services and other services and items of value that allegedly induced Humira prescriptions. In September 2021, the court granted plaintiffs' motion to certify a class.
In May and July 2022, two shareholder derivative lawsuits, Treppel Family Trust v. Gonzalez et al., and Katcher v. Gonzalez, et al., were filed in the United States District Court for the Northern District of Illinois, alleging that certain AbbVie directors and officers breached fiduciary and other legal duties in making or allowing alleged misstatements regarding the potential effect that safety information about another company’s product would have on the Food and Drug Administration’s approval and labeling for AbbVie’s Rinvoq. In October 2024, the court granted defendants’ motion to dismiss without prejudice. In November 2024, the dismissal was converted to one with prejudice.
Product Liability and General Litigation
In April 2023, a putative class action lawsuit, Camargo v. AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois on behalf of Humira patients who paid for Humira based on its list price or who, after losing insurance coverage, discontinued Humira because they could not pay based on its list price, alleging that Humira’s list price is excessive in violation of multiple states’ unfair and deceptive trade practices statutes. The plaintiff generally seeks monetary damages, injunctive relief, and attorneys’ fees.
In 2018, a qui tam lawsuit, U.S. ex rel. Silbersher v. Allergan Inc., et al., was filed in the United States District Court for the Northern District of California against several Allergan entities and others, alleging that their conduct before the U.S. Patent Office resulted in false claims for payment being made to federal and state healthcare payors for Namenda XR and Namzaric. The plaintiff-relator sought damages and attorneys' fees under the federal False Claims Act and state law analogues. The federal government and state governments declined to intervene in the lawsuit. In March 2023, the court granted Allergan’s motion to dismiss, dismissing plaintiff-relator’s federal law claims with prejudice and state law claims without prejudice. The plaintiff-relator is appealing the court’s motion to dismiss ruling.
Lawsuits are pending against various Allergan entities in the United States and other countries including Brazil, Canada, South Korea, and the Netherlands, in which plaintiffs generally allege that they developed, or may develop, breast implant-
| | | | | | | | | | | |
| | 2024 Form 10-K | | 96 |
ALCL lawsuits and other lawsuits are coordinated for pre-trial purposes in the United States District Court for the District of New Jersey under the MDL rules as In re: Allergan Biocell Textured Breast Implant Product Liability Litigation, MDL No. 2921. Approximately ALCL lawsuits and other lawsuits are pending in various state courts. Approximately ALCL and other lawsuits are pending in other countries. Plaintiffs generally seek monetary damages, medical monitoring, and attorneys’ fees.In January 2025, a putative class action lawsuit, Sheet Metal Workers’ Health Plan of Southern California, Arizona, and Nevada v. AbbVie Inc., was filed in the United States District Court for the Northern District of Illinois on behalf of third-party payors of Humira, alleging that AbbVie’s rebating practices are impairing biosimilar competition with Humira in violation of federal and state antitrust laws. The plaintiff generally seeks monetary damages, injunctive relief and attorneys' fees.
Intellectual Property Litigation
AbbVie Inc. is seeking to enforce patent rights relating to upadacitinib (a drug sold under the trademark Rinvoq). Litigation was filed in the United States District Court for the District of Delaware in November 2023 against Hetero USA, Inc., Hetero Labs Limited, Hetero Labs Limited Unit-V, Aurobindo Pharma USA, Inc., Aurobindo Pharma Ltd., Sandoz, Inc., Sandoz Private Limited, Sandoz GMBH, and Sun Pharmaceutical Industries, Ltd. AbbVie alleges defendants’ proposed generic upadacitinib products infringe certain patents and seeks declaratory and injunctive relief.
AbbVie Inc. is seeking to enforce patent rights related to ubrogepant (a drug sold under the trademark Ubrelvy). Litigation was filed in the United States District Court for the District of New Jersey in March 2024 against Aurobindo Pharma U.S.A., Inc., Aurobindo Pharma Limited, and Apitoria Pharma Private Limited; Zydus Pharmaceuticals (USA) Inc. and Zydus Lifesciences Limited; MSN Pharmaceuticals Inc., MSN Laboratories Private Limited, and MSN Life Sciences Private Limited; and Hetero USA Inc., Hetero Labs Limited Unit-III, and Hetero Labs Limited. AbbVie alleges defendants’ proposed generic ubrogepant products infringe certain patents and seeks declaratory and injunctive relief. Merck Sharp & Dohme LLC, which exclusively licenses certain patents to AbbVie, is a co-plaintiff in the litigation.
| | | | | | | | | | | |
97 | | 2024 Form 10-K | | |
| | $ | | | | $ | | | | International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Skyrizi | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Rinvoq | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Oncology | | | | | |
| Imbruvica | United States | $ | | | | $ | | | | $ | | |
| Collaboration revenues | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Venclexta | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Elahere(a) | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Epkinly | Collaboration revenues | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Aesthetics | | | | | |
Botox Cosmetic | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Juvederm Collection | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Other Aesthetics | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Neuroscience | | | | | |
Botox Therapeutic | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Vraylar | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Duodopa | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Ubrelvy | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Qulipta | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| | | | | | | | | | | |
| | 2024 Form 10-K | | 98 |
| | $ | | | | $ | | | | International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Eye Care | | | | | |
| Ozurdex | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Lumigan/Ganfort | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Alphagan/Combigan | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Restasis | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
Other Eye Care | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Other Key Products | | | | | |
| Mavyret | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| Creon | United States | $ | | | | $ | | | | $ | | |
Linzess/Constella | United States | $ | | | | $ | | | | $ | | |
| International | | | | | | | | |
| Total | $ | | | | $ | | | | $ | | |
| All other | | $ | | | | $ | | | | $ | | |
| Total net revenues | | $ | | | | $ | | | | $ | | |
(a)Net revenues include ImmunoGen product revenues after the acquisition closing date of February 12, 2024.
| | | | | | | | | | | |
99 | | 2024 Form 10-K | | |
| | $ | | | | $ | | | | Germany | | | | | | | | |
| Japan | | | | | | | | |
| Canada | | | | | | | | |
| China | | | | | | | | |
| France | | | | | | | | |
| Spain | | | | | | | | |
| United Kingdom | | | | | | | | |
| Italy | | | | | | | | |
| Brazil | | | | | | | | |
| Australia | | | | | | | | |
| All other countries | | | | | | | | |
| Total net revenues | $ | | | | $ | | | | $ | | |
See the following for additional information about certain income and expenses included in net earnings: intangible assets amortization expense (Note 7), intangible assets impairment expense (Note 7), change in fair value of contingent consideration (Note 11), interest income and expense (Note 3), depreciation expense (Note 2), litigation matters (Note 15), income tax expense (Note 14) and restructuring expense (Note 8).
| | $ | | | | Europe | | | | | |
| All other | | | | | |
| Total long-lived assets | $ | | | | $ | | |
| | Gross margin | | |
Net loss attributable to AbbVie Inc. | () | |
| Basic loss per share attributable to AbbVie Inc. | $ | () | |
| Diluted loss per share attributable to AbbVie Inc. | $ | () | |
| Cash dividends declared per common share | $ | | | | | | | | | | | | | | |
| | 2024 Form 10-K | | 100 |
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, 2024 and 2023, the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, 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, 2024, 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 14, 2025 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 consolidated 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.
| | | | | | | | | | | |
101 | | 2024 Form 10-K | | |
| | | | | | | | |
| | Sales rebate accruals for Medicaid, Medicare and managed care programs |
| Description of the Matter | | 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, 2024, the Company had $ million in sales rebate accruals, a large portion of which were for rebates accrued for 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 the rebate accruals, the Company estimated its rebates based on estimates and assumptions, including the determination of the related payer of the rebate based on sales trends, changes in rebate contracts which impacts the applicable price and rebate terms, and the corresponding lag in payment timing. 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. In deriving these estimates and assumptions, the Company used both internal and external sources of information. Management supplemented its historical data analysis with qualitative adjustments based upon changes in rebate trends, rebate programs, contract terms, legislative changes, or other significant events which indicate a change in the reserve is appropriate. |
| How We Addressed the Matter in Our Audit | | 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. Specifically, we tested management’s controls to evaluate the sufficiency of its reserve estimates by comparing to actual rebates paid, controls over rebate validation and processing, and controls to ensure that the data used to evaluate and support the significant assumptions was complete and accurate. To test the sales rebate accruals and assess the historical accuracy of management's estimate for Medicaid, Medicare and managed care programs, our audit procedures included independently calculating the sales rebate accruals based on historical payments and performing a hindsight analysis on the reserves recorded. Our testing of significant assumptions included corroborating management's estimate of the rebate claims processing lag time for each type of rebate. We evaluated the reasonableness of assumptions considering industry and economic trends, product profiles, and other regulatory factors. 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. |
| | |
| | | | | | | | | | | |
| | 2024 Form 10-K | | 102 |
| | | | | | | | |
| | Valuation of contingent consideration |
| Description of the Matter | | As discussed in Note 2 to the consolidated financial statements under the caption “Business Combinations” and in Note 11 under the caption “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, 2024, the Company had $ 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, to determine certain of these assumptions. |
| How We Addressed the Matter in Our Audit | | 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 estimated future sales, and 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 external data sources. Estimated amounts of future sales were also evaluated for reasonableness. 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/
We have served as the Company’s auditor since 2013.
February 14, 2025
| | | | | | | | | | | |
103 | | 2024 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, Robert A. Michael, and the Chief Financial Officer, Scott T. Reents, evaluated the effectiveness of AbbVie's disclosure controls and procedures as of the end of the period covered by this report, and concluded that AbbVie's disclosure controls and procedures were effective to ensure that information AbbVie is required to disclose in the reports that it files or submits with the Securities and Exchange Commission under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms, and to ensure that information required to be disclosed by AbbVie in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to AbbVie's management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
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, 2024.
Inherent limitations on effectiveness of controls. AbbVie's management, including its Chief Executive Officer and its Chief Financial Officer, do not expect that AbbVie's disclosure controls or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.
The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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, 2024. 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, 2024, based on the COSO criteria.
The effectiveness of AbbVie's internal control over financial reporting as of December 31, 2024 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, 2024.
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.
| | | | | | | | | | | |
| | 2024 Form 10-K | | 104 |
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, 2024, 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, 2024, 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 the Company as of December 31, 2024 and 2023, the related consolidated statements of earnings, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and our report dated February 14, 2025 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 of 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 14, 2025
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105 | | 2024 Form 10-K | | |
, modified or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as provided below. | | | | | | | | | | | | | | | | | |
| Name & Title | Action Taken | Date Adopted | Type of Trading Arrangement (1) | Aggregate Number of Shares to be Sold Pursuant to Trading Arrangement (2) | Duration of Trading Arrangement(3) |
| |
| Rule 10b5-1 Trading Arrangement | Up to Shares to be Sold |
|
| |
| Rule 10b5-1 Trading Arrangement | Up to Shares to be Sold |
|
1. Except as indicated by footnote, each trading arrangement marked as a "Rule 10b5-1 Trading Arrangement" is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended.
2. The number of shares to be sold under each trading arrangement represents the maximum actual number of shares issuable under the applicable performance stock awards. The actual number of shares to be sold under each trading arrangement will depend on the achievement of applicable performance conditions under the performance stock awards and the number of shares withheld to satisfy tax obligations upon the vesting of the awards.
3. Except as indicated by footnote, each trading arrangement permitted or permits transactions through and including the earlier to occur of (a) the completion of all sales or (b) the date listed in the table. Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” only permitted or only permits transactions upon expiration of the applicable mandatory cooling-off period under the Rule.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable.
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| | 2024 Form 10-K | | 106 |
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," "Communicating with the Board of Directors," "Deadlines for Notice of Stockholder Actions to be Considered at the 2025 Annual Meeting of Stockholders" and "Insider Trading Policy" to be included in the 2025 AbbVie Inc. Proxy Statement. The 2025 Definitive Proxy Statement will be filed on or about March 24, 2025. 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 expected to 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 investors.abbvie.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 Executive Vice President, General Counsel and Secretary, to the public policy and sustainability committee, and to the full board of directors. 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 2025 AbbVie Inc. Proxy Statement under the headings "Director Compensation," "Executive Compensation," and "Compensation Committee Report" is incorporated herein by reference. The 2025 Definitive Proxy Statement will be filed on or about March 24, 2025.
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107 | | 2024 Form 10-K | | |
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, 2024 about AbbVie's equity compensation plans under which AbbVie common stock has been authorized for issuance: | | | | | | | | | | | | | | | | | |
| Plan Category | (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) |
| Equity compensation plans approved by security holders | 16,000,443 | | | $ | 117.48 | | | 55,106,928 | |
| Equity compensation plans not approved by security holders | — | | | — | | | — | |
| Total | 16,000,443 | | | $ | 117.48 | | | 55,106,928 | |
(1)Includes 12,197 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, the ImmunoGen 2018 Equity Incentive Plan and the Cerevel Therapeutics 2020 Equity Incentive Plan. AbbVie assumed these incentive plans upon the consummation of acquisition of Stemcentrx, Inc., ImmunoGen Inc. and Cerevel Therapeutics Holdings, Inc. As of December 31, 2024, 33,494 options with a weighted-average exercise price of $18.89 remained outstanding under the Stemcentrx plan, and 120,401 and 174,123 unvested restricted stock units remained outstanding under the ImmunoGen and Cerevel Therapeutics plans, respectively. No further awards will be granted under these plans.
(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 2025 AbbVie Inc. Proxy Statement. The 2025 Definitive Proxy Statement will be filed on or about March 24, 2025.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The material to be included in the 2025 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 2025 Definitive Proxy Statement will be filed on or about March 24, 2025.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The material to be included in the 2025 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 2025 Definitive Proxy Statement will be filed on or about March 24, 2025.
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| | 2024 Form 10-K | | 108 |
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" 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:
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Exhibit Number | | Exhibit Description | |
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| | *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). | |
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109 | | 2024 Form 10-K | | |
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Exhibit Number | | Exhibit Description | |
| | *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). | |
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| | *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). | |
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| | *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). | |
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| | *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). | |
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| | 2024 Form 10-K | | 110 |
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111 | | 2024 Form 10-K | | |
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| 101 | | The following financial statements and notes from the AbbVie Inc. Annual Report on Form 10-K for the year ended December 31, 2024 filed on February 14, 2025, 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. 2025 Definitive Proxy Statement will be filed with the Securities and Exchange Commission under separate cover on or about March 24, 2025. | |
_______________________________________________________________________________
* 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.
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| | 2024 Form 10-K | | 112 |
ITEM 16. FORM 10-K SUMMARY None.
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113 | | 2024 Form 10-K | | |
SIGNATURES
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.
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| AbbVie Inc. |
| By: | | /s/ ROBERT A. MICHAEL |
| | | Name: | | Robert A. Michael |
| | | Title: | | Chief Executive Officer and Director
|
| Date: | | February 14, 2025 |
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 14, 2025 in the capacities indicated below.
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| /s/ ROBERT A. MICHAEL | | /s/ SCOTT T. REENTS |
Robert A. Michael
Chief Executive Officer and Director
(Principal Executive Officer)
| | Scott T. Reents
Executive Vice President, Chief Financial Officer
(Principal Financial Officer)
|
| | |
/s/ KEVIN K. BUCKBEE | | /s/ RICHARD A. GONZALEZ |
Kevin K. Buckbee Senior Vice President, Controller (Principal Accounting Officer) | | Richard A. Gonzalez Executive Chairman of the Board and Retired Chief Executive Officer
|
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| /s/ ROBERT J. ALPERN, M.D. | | /s/ ROXANNE S. AUSTIN |
Robert J. Alpern, M.D.
Director of AbbVie Inc. | | Roxanne S. Austin
Director of AbbVie Inc. |
| | |
| /s/ WILLIAM H.L. BURNSIDE | | /s/ JENNIFER L. DAVIS |
William H.L. Burnside
Director of AbbVie Inc. | | Jennifer L. Davis Director of AbbVie Inc. |
| | |
| /s/ THOMAS C. FREYMAN | | /s/ BRETT J. HART |
Thomas C. Freyman
Director of AbbVie Inc. | | Brett J. Hart
Director of AbbVie Inc. |
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| /s/ MELODY B. MEYER | | /s/ SUSAN E. QUAGGIN, M.D. |
Melody B. Meyer
Director of AbbVie Inc. | | Susan E. Quaggin, M.D. Director of AbbVie Inc. |
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| /s/ EDWARD J. RAPP | | /s/ REBECCA B. ROBERTS |
Edward J. Rapp
Director of AbbVie Inc. | | Rebecca B. Roberts
Director of AbbVie Inc. |
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| /s/ GLENN F. TILTON | | /s/ FREDERICK H. WADDELL |
Glenn F. Tilton
Director of AbbVie Inc. | | Frederick H. Waddell
Director of AbbVie Inc. |
| | | | | | | | | | | |
| | 2024 Form 10-K | | 114 |
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