AbbVie Inc.

AbbVie is a global, diversified research-based biopharmaceutical company with a comprehensive product portfolio that has leadership positions across immunology, neuroscience, oncology and aesthetics. The company operates as a single global business segment dedicated to the research and development, manufacturing, commercialization and sale of innovative medicines and therapies. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market, works through largely centralized national payers systems to agree on reimbursement terms.

The markets for AbbVie's products are highly competitive. AbbVie competes with other research-based pharmaceuticals and biotechnology companies that discover, manufacture, market and sell proprietary pharmaceutical products, therapies and biologics. AbbVie's immunology products compete with IL-23 inhibitors, IL-17 inhibitors, JAK inhibitors, biosimilars and other competitive products. AbbVie's oncology products compete with targeted therapies including BTK inhibitors, ADCs, cell therapies and other competitive products. A number of other companies have successfully developed and market products that are being positioned as competitors to Botox. Humira faces direct biosimilar competition globally. In 2025, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and Cencora, Inc.) accounted for substantially all of AbbVie's pharmaceutical product sales in the United States. No individual wholesaler accounted for greater than 43% of AbbVie's 2025 gross revenues in the United States.

AbbVie generates revenue primarily from product sales. For the majority of sales, the company transfers control, invoices the customer and recognizes revenue upon shipment to the customer. AbbVie also recognizes certain collaboration revenues. The company provides rebates to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations and other government agencies and private entities. Provisions for rebates and chargebacks totaled $65.1 billion ¹ in 2025, $59.3 billion ² in 2024 and $56.8 billion ³ in 2023. AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers.

AbbVie's immunology portfolio includes Skyrizi (risankizumab), an interleukin-23 (IL-23) inhibitor approved to treat plaque psoriasis, psoriatic arthritis, Crohn's disease and ulcerative colitis in North America, the European Union and Japan. Rinvoq (upadacitinib) is an oral, once-daily selective and reversible JAK inhibitor approved to treat rheumatoid arthritis, psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, non-radiographic axial spondyloarthritis, ulcerative colitis, Crohn's disease, giant cell arteritis and active polyarticular juvenile idiopathic arthritis in various markets. Humira (adalimumab) is a biologic therapy approved to treat numerous autoimmune diseases in North America and the European Union. Neuroscience products include Vraylar (cariprazine) for schizophrenia and bipolar disorder, Botox Therapeutic (onabotulinumtoxinA) for chronic migraine and other indications, Ubrelvy (ubrogepant) for acute migraine, Qulipta (atogepant) for migraine prevention, Vyalev (foscarbidopa and foslevodopa) for advanced Parkinson's disease, and Duodopa (carbidopa and levodopa) for advanced Parkinson's disease. Oncology products include Imbruvica (ibrutinib) for blood cancers, Venclexta (venetoclax) for blood cancers, Elahere (mirvetuximab soravtansine-gynx) for certain ovarian cancers, and Epkinly (epcoritamab) for certain types of lymphoma. Aesthetics products include Botox Cosmetic (onabotulinumtoxinA) and the Juvederm Collection of hyaluronic acid-based dermal fillers. Eye care products include Ozurdex, Lumigan/Ganfort, Alphagan/Combigan and other products. Other key products include Mavyret for hepatitis C virus, Creon for exocrine pancreatic insufficiency, and Linzess/Constella for irritable bowel syndrome with constipation and chronic idiopathic constipation.

In 2025, AbbVie announced the start of construction of a new active pharmaceutical ingredient facility in Illinois and an expansion of biologics manufacturing and research and development capacity in Massachusetts. In January 2026, AbbVie announced that it entered into an agreement to acquire a device manufacturing facility in Arizona. In September 2025, AbbVie settled litigation with all generic manufacturers that filed abbreviated new drug applications with the U.S. FDA for generic versions of upadacitinib tablets. Given the settlement and license agreements, which are subject to standard acceleration provisions, assuming pediatric exclusivity is granted, no generic entry for Rinvoq tablets is expected prior to April 2037 in the United States. In 2025, AbbVie entered into several licensing and acquisition arrangements, including the acquisition of Capstan Therapeutics, Inc., the acquisition of Gilgamesh Pharmaceuticals, Inc., a license agreement with Ichnos Glenmark Innovation, Inc., a license agreement with Gubra A/S, and an option-to-license agreement with ADARx Pharmaceuticals, Inc. In 2024, AbbVie acquired ImmunoGen, Inc. and Cerevel Therapeutics Holdings, Inc. On February 13, 2025, the board of directors unanimously elected CEO Robert A. Michael to succeed Richard A. Gonzalez as Chairman of the board of directors, effective July 1, 2025.

AbbVie's financial performance in 2025 included delivering worldwide net revenues of $61.2 billion ⁴, operating earnings of $15.1 billion ⁵, diluted earnings per share of $2.36 ⁶ and cash flows from operations of $19.0 billion ⁷. Worldwide net revenues increased by 9% ⁸ on a reported and on a constant currency basis. Financial results for 2025 also included costs of $7.4 billion ⁹ related to the amortization of intangible assets, $6.5 billion ¹⁰ for the change in fair value of contingent consideration liabilities, $847 million ¹¹ related to intangible asset impairment, and $276 million ¹² of acquisition and integration expenses.

The filing states that AbbVie expects to achieve its strategic objectives through maximizing revenue growth of key on-market products, advancing the research and development pipeline by delivering late-stage pipeline milestones, maximizing the value of key acquisitions, and the favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2026.

AbbVie intends to maximize revenue growth of its key on-market products, including Skyrizi, Rinvoq, Vraylar, Botox Therapeutic, Ubrelvy, Qulipta, Vyalev, Venclexta, Elahere, Botox Cosmetic and Juvederm Collection. The company also plans to advance its research and development pipeline by delivering late-stage pipeline milestones, achieving key proof-of-concept objectives across therapeutic areas and continuing to invest in key on-market product indication expansion. AbbVie's pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements. Of these programs, approximately 60 are in mid- and late-stage development. The company's pipeline is focused on therapeutic areas including immunology, neuroscience, oncology and aesthetics and other specialties, including obesity. AbbVie expects multiple mid-stage programs to transition into late-stage programs in the next 12 months.

AbbVie intends to maximize the value of key acquisitions as well as continuing to invest in external innovation. The company anticipates several regulatory submissions, approvals and data readouts from key clinical trials in the next 12 months. In the immunology pipeline, Rinvoq received FDA approval for giant cell arteritis in April 2025 and positive topline results were announced from Phase 3 trials for alopecia areata and vitiligo. In neuroscience, Qulipta initiated a Phase 3 trial for menstrual migraine and announced positive topline results from a head-to-head study versus topiramate. Tavapadon, a novel selective dopamine D1/D5 receptor partial agonist for Parkinson's disease, had a New Drug Application submitted to the FDA in September 2025. In oncology, Emrelis received FDA accelerated approval in May 2025 for non-small cell lung cancer. A supplemental NDA was submitted for Venclexta plus acalabrutinib in previously untreated CLL. Epkinly received FDA approval for relapsed/refractory follicular lymphoma in November 2025. A BLA was submitted for pivekimab sunirine for blastic plasmacytoid dendritic cell neoplasm in September 2025. In aesthetics, a BLA was submitted for trenibotulinumtoxinE for glabellar lines in April 2025. The FDA accepted for review the supplemental premarket approval application for Skinvive by Juvederm to reduce neck lines in June 2025.

Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased in 2025 compared to 2024. SG&A expense percentage for 2025 was favorably impacted by net leverage from revenue growth, lower litigation reserve charges and lower acquisition and integration costs. Research and development (R&D) expenses as a percentage of net revenues decreased in 2025 compared to 2024. R&D expense percentage for 2025 was favorably impacted by lower intangible asset impairment charges. R&D expenses other than intangible asset impairment charges increased to support all stages of the company's pipeline assets. Gross margin as a percentage of net revenues in 2025 was flat compared to 2024 at 70% ¹³. Gross margin percentage for 2025 was favorably impacted by increased leverage from net revenues growth, lower amortization of intangible assets and lower acquisition and integration costs offset by the unfavorable impact of intangible asset impairment charges of $847 million ¹⁴.

AbbVie's capital expenditures for pollution control in 2025 were approximately $17 million ¹⁵ and operating expenditures were approximately $44 million ¹⁶. In 2026, capital expenditures for pollution control are estimated to be approximately $21 million ¹⁷ and operating expenditures are estimated to be approximately $46 million ¹⁸. AbbVie announced a voluntary agreement with the U.S. government to pledge $100 billion ¹⁹ in U.S.-based research and development and capital investments, including manufacturing, over the next decade. AbbVie employed approximately 57,000 employees ²⁰ in over 70 countries as of December 31, 2025.

AbbVie's research and development spending included acquired IPR&D and milestones expense of $5,016 million ²¹ in 2025, $2,757 million ²² in 2024 and $778 million ²³ in 2023. Acquired IPR&D and milestones expense in 2025 included upfront charges of $1.9 billion ²⁴ related to the acquisition of Capstan Therapeutics, Inc., $906 million ²⁵ related to the acquisition of Gilgamesh Pharmaceuticals, Inc., $700 million ²⁶ related to a license agreement with Ichnos Glenmark Innovation, Inc., $350 million ²⁷ related to a license agreement with Gubra A/S and $335 million ²⁸ related to an option-to-license agreement with ADARx Pharmaceuticals, Inc. Capital expenditures were $1,214 million ²⁹ in 2025 and $974 million ³⁰ in 2024. AbbVie repurchased 3 million shares for $606 million ³¹ in 2025 and 7 million shares for $1.3 billion ³² in 2024. AbbVie's remaining stock repurchase authorization was $2.9 billion ³³ as of December 31, 2025. On October 31, 2025, AbbVie announced that its board of directors declared an increase in the company's quarterly dividend from $1.64 per share ³⁴ to $1.73 per share ³⁵, payable on February 17, 2026.

AbbVie faces significant pricing pressures from government cost-containment efforts. The Inflation Reduction Act of 2022 requires the government to set prices for select high expenditure Medicare Part D drugs beginning in 2026 and Part B drugs beginning in 2028. In August 2023, HHS selected Imbruvica as one of 10 medicines subject to government-set prices in Medicare Part D beginning January 1, 2026. In January 2025, Vraylar and Linzess were selected as two of 15 medicines subject to government-set prices in Medicare Part D beginning January 1, 2027. In January 2026, Botox was selected as one of 15 medicines subject to government-set prices in Medicare Parts B and D beginning January 1, 2028. It is possible that more of AbbVie's products could be selected in future years. The IRA also includes a Medicare Part D redesign replacing the coverage gap provisions and establishing a $2,000 cap for out-of-pocket costs for Medicare beneficiaries beginning in 2025, with manufacturers being responsible for 10% of costs up to the $2,000 cap and 20% after that cap is reached. AbbVie also faces risks from the expiration or loss of patent protection, with Skyrizi and Rinvoq in aggregate accounting for approximately 42% ³⁶ of total net revenues in 2025.

AbbVie's business is subject to risks associated with doing business internationally, including fluctuations in currency exchange rates, changes in medical reimbursement policies and programs, pricing restrictions, multiple legal and regulatory requirements, import or export licensing requirements, international trade disruptions or disputes, and political and economic instability. Net revenues outside of the United States made up approximately 24% ³⁷ of AbbVie's total net revenues in 2025. AbbVie is also subject to risks from consolidation and vertical integration among pharmacy benefit managers, managed care organizations and other supply chain intermediaries, which has increased their purchasing power and ability to influence formulary placement and reimbursement levels. The company faces risks from trade restrictions, tariffs, and other changes in global trade policy that could increase costs, disrupt supply chains, and adversely affect business and results of operations.

A significant portion of AbbVie's revenues and operating earnings are derived from two major products, Skyrizi and Rinvoq, which in aggregate accounted for approximately 42% ³⁸ of total net revenues in 2025. The expiration or loss of patent protection for these or other products could lead to competition from lower-priced generics or biosimilars, materially reducing revenues. The Inflation Reduction Act of 2022 has already selected Imbruvica, Vraylar, Linzess, and Botox for government-set prices in Medicare, and more products could be selected in future years, which could accelerate revenue erosion prior to expiration of intellectual property protections. AbbVie faces significant pricing pressures from pharmacy benefit managers and other supply chain intermediaries whose consolidation and vertical integration has increased their purchasing power and ability to influence formulary placement and reimbursement levels. The company's research and development efforts face a high rate of failure inherent in the biopharmaceutical industry, and products that appear promising may fail to reach the market for numerous reasons including failure to demonstrate effectiveness, safety concerns, or inability to obtain regulatory approvals. AbbVie's significant balances of intangible assets, including developed product rights of $52.6 billion ³⁹ and goodwill of $35.6 billion ⁴⁰ as of December 31, 2025, are subject to impairment testing and could result in material impairment charges if future cash flow projections are not realized.

Management's message emphasizes AbbVie's mission to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. The strategic priorities emphasized for the period ahead include maximizing the benefits of a diversified revenue base with multiple long-term growth drivers, leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas, continuing to invest in and expand its pipeline in support of opportunities across core areas of immunology, neuroscience, oncology and aesthetics as well as new sources of growth such as obesity, and generating substantial operating cash flows to support investments in innovative research and development and returning cash to shareholders via a strong and growing dividend while maintaining a strong investment grade credit rating. The filing states that AbbVie expects to achieve its strategic objectives through maximizing revenue growth of key on-market products, advancing the research and development pipeline by delivering late-stage pipeline milestones, maximizing the value of key acquisitions, and the favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2026.