UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023

OR

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                    to                                   

Commission File Number: 001-35565

AbbVie Inc.

(Exact name of registrant as specified in its charter)
Delaware	32-0375147
(State or other jurisdiction of incorporation or organization)	(I.R.S. employer identification number)

1 North Waukegan Road

North Chicago, Illinois 60064-6400

Telephone: (847) 932-7900

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).        Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-Accelerated Filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).        Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	ABBV	New York Stock Exchange
		Chicago Stock Exchange
1.500% Senior Notes due 2023	ABBV23B	New York Stock Exchange
1.375% Senior Notes due 2024	ABBV24	New York Stock Exchange
1.250% Senior Notes due 2024	ABBV24B	New York Stock Exchange
0.750% Senior Notes due 2027	ABBV27	New York Stock Exchange
2.125% Senior Notes due 2028	ABBV28	New York Stock Exchange
2.625% Senior Notes due 2028	ABBV28B	New York Stock Exchange
2.125% Senior Notes due 2029	ABBV29	New York Stock Exchange
1.250% Senior Notes due 2031	ABBV31	New York Stock Exchange

As of July 31, 2023, AbbVie Inc. had 1,765,046,680 shares of common stock at $0.01 par value outstanding.

AbbVie Inc. and Subsidiaries

Table of Contents

PART I.	FINANCIAL INFORMATION
		Page
Item 1.	FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	1
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	24
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	33
Item 4.	CONTROLS AND PROCEDURES	34
PART II.	OTHER INFORMATION
Item 1.	LEGAL PROCEEDINGS	35
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	35
Item 5.	OTHER ITEMS	35
Item 6.	EXHIBITS	36

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

AbbVie Inc. and Subsidiaries

Condensed Consolidated Statements of Earnings (unaudited)

	Three months ended June 30,				Six months ended June 30,
(in millions, except per share data)	2023		2022		2023		2022
Net revenues	$	13,865	$	14,583	$	26,090	$	28,121
Cost of products sold	4,240		4,170		8,226		8,222
Selling, general and administrative	3,268		5,412		6,307		8,539
Research and development	1,733		1,609		4,025		3,106
Acquired IPR&D and milestones	280		269		430		414
Other operating income	(169)		(172)		(179)		(172)
Total operating costs and expenses	9,352		11,288		18,809		20,109
Operating earnings	4,513		3,295		7,281		8,012
Interest expense, net	454		532		908		1,071
Net foreign exchange loss	37		47		72		72
Other expense, net	1,412		1,533		3,216		757
Earnings before income tax expense	2,610		1,183		3,085		6,112
Income tax expense	583		255		817		691
Net earnings	2,027		928		2,268		5,421
Net earnings attributable to noncontrolling interest	3		4		5		7
Net earnings attributable to AbbVie Inc.	$	2,024	$	924	$	2,263	$	5,414
Per share data
Basic earnings per share attributable to AbbVie Inc.	$	1.14	$	0.52	$	1.27	$	3.04
Diluted earnings per share attributable to AbbVie Inc.	$	1.14	$	0.51	$	1.26	$	3.03
Weighted-average basic shares outstanding	1,767		1,770		1,768		1,770
Weighted-average diluted shares outstanding	1,771		1,776		1,773		1,777

The accompanying notes are an integral part of these condensed consolidated financial statements.

2023 Form 10-Q | 1

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (unaudited)

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Net earnings	$	2,027	$	928	$	2,268	$	5,421
Foreign currency translation adjustments, net of tax expense (benefit) of $(6) for the three months and $6 for the six months ended June 30, 2023 and $(12) for the three months and $(19) for the six months ended June 30, 2022	(16)		(823)		178		(1,054)
Net investment hedging activities, net of tax expense (benefit) of $2 for the three months and $(58) for the six months ended June 30, 2023 and $146 for the three months and $183 for the six months ended June 30, 2022	11		536		(213)		666
Pension and post-employment benefits, net of tax expense (benefit) of $(4) for the three months and $10 for the six months ended June 30, 2023 and $11 for the three months and $21 for the six months ended June 30, 2022	(2)		48		36		76
Cash flow hedging activities, net of tax expense (benefit) of $(4) for the three months and $(8) for the six months ended June 30, 2023 and $5 for the three months and $3 for the six months ended June 30, 2022	(13)		27		(54)		15
Other comprehensive loss	(20)		(212)		(53)		(297)
Comprehensive income	2,007		716		2,215		5,124
Comprehensive income attributable to noncontrolling interest	3		4		5		7
Comprehensive income attributable to AbbVie Inc.	$	2,004	$	712	$	2,210	$	5,117

The accompanying notes are an integral part of these condensed consolidated financial statements.

2023 Form 10-Q | 2

AbbVie Inc. and Subsidiaries
Condensed Consolidated Balance Sheets

(in millions, except share data)	June 30, 2023		December 31, 2022
	(unaudited)
Assets
Current assets
Cash and equivalents	$	8,759	$	9,201
Short-term investments	7		28
Accounts receivable, net	11,491		11,254
Inventories	4,055		3,579
Prepaid expenses and other	4,540		4,401
Total current assets	28,852		28,463
Investments	288		241
Property and equipment, net	4,943		4,935
Intangible assets, net	62,862		67,439
Goodwill	32,224		32,156
Other assets	6,198		5,571
Total assets	$	135,367	$	138,805
Liabilities and Equity
Current liabilities
Short-term borrowings	$	—	$	1
Current portion of long-term debt and finance lease obligations	5,203		4,135
Accounts payable and accrued liabilities	27,036		25,402
Total current liabilities	32,239		29,538
Long-term debt and finance lease obligations	55,812		59,135
Deferred income taxes	2,124		2,190
Other long-term liabilities	32,294		30,655
Commitments and contingencies
Stockholders' equity
Common stock, $0.01 par value, 4,000,000,000 shares authorized, 1,821,926,709 shares issued as of June 30, 2023 and 1,813,770,294 as of December 31, 2022	18		18
Common stock held in treasury, at cost, 57,127,750 shares as of June 30, 2023 and 44,589,000 as of December 31, 2022	(6,528)		(4,594)
Additional paid-in capital	19,839		19,245
Retained earnings	1,789		4,784
Accumulated other comprehensive loss	(2,252)		(2,199)
Total stockholders' equity	12,866		17,254
Noncontrolling interest	32		33
Total equity	12,898		17,287
Total liabilities and equity	$	135,367	$	138,805

The accompanying notes are an integral part of these condensed consolidated financial statements.

2023 Form 10-Q | 3

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Equity (unaudited)

(in millions)	Common shares outstanding	Common stock		Treasury stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Noncontrolling interest		Total
Balance at March 31, 2022	1,767	$	18	$	(4,585)	$	18,731	$	5,103	$	(2,984)	$	31	$	16,314
Net earnings attributable to AbbVie Inc.	—	—		—		—		924		—		—		924
Other comprehensive loss, net of tax	—	—		—		—		—		(212)		—		(212)
Dividends declared	—	—		—		—		(2,511)		—		—		(2,511)
Purchases of treasury stock	—	—		(9)		—		—		—		—		(9)
Stock-based compensation plans and other	1	—		3		175		—		—		—		178
Change in noncontrolling interest	—	—		—		—		—		—		4		4
Balance at June 30, 2022	1,768	$	18	$	(4,591)	$	18,906	$	3,516	$	(3,196)	$	35	$	14,688
Balance at March 31, 2023	1,764	$	18	$	(6,524)	$	19,619	$	2,393	$	(2,232)	$	29	$	13,303
Net earnings attributable to AbbVie Inc.	—	—		—		—		2,024		—		—		2,024
Other comprehensive loss, net of tax	—	—		—		—		—		(20)		—		(20)
Dividends declared	—	—		—		—		(2,628)		—		—		(2,628)
Purchases of treasury stock	—	—		(10)		—		—		—		—		(10)
Stock-based compensation plans and other	1	—		6		220		—		—		—		226
Change in noncontrolling interest	—	—		—		—		—		—		3		3
Balance at June 30, 2023	1,765	$	18	$	(6,528)	$	19,839	$	1,789	$	(2,252)	$	32	$	12,898
Balance at December 31, 2021	1,768	$	18	$	(3,143)	$	18,305	$	3,127	$	(2,899)	$	28	$	15,436
Net earnings attributable to AbbVie Inc.	—	—		—		—		5,414		—		—		5,414
Other comprehensive loss, net of tax	—	—		—		—		—		(297)		—		(297)
Dividends declared	—	—		—		—		(5,025)		—		—		(5,025)
Purchases of treasury stock	(10)	—		(1,479)		—		—		—		—		(1,479)
Stock-based compensation plans and other	10	—		31		601		—		—		—		632
Change in noncontrolling interest	—	—		—		—		—		—		7		7
Balance at June 30, 2022	1,768	$	18	$	(4,591)	$	18,906	$	3,516	$	(3,196)	$	35	$	14,688
Balance at December 31, 2022	1,769	$	18	$	(4,594)	$	19,245	$	4,784	$	(2,199)	$	33	$	17,287
Net earnings attributable to AbbVie Inc.	—	—		—		—		2,263		—		—		2,263
Other comprehensive loss, net of tax	—	—		—		—		—		(53)		—		(53)
Dividends declared	—	—		—		—		(5,258)		—		—		(5,258)
Purchases of treasury stock	(12)	—		(1,965)		—		—		—		—		(1,965)
Stock-based compensation plans and other	8	—		31		594		—		—		—		625
Change in noncontrolling interest	—	—		—		—		—		—		(1)		(1)
Balance at June 30, 2023	1,765	$	18	$	(6,528)	$	19,839	$	1,789	$	(2,252)	$	32	$	12,898

The accompanying notes are an integral part of these condensed consolidated financial statements.

2023 Form 10-Q | 4

AbbVie Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)

	Six months ended June 30,
(in millions) (brackets denote cash outflows)	2023		2022
Cash flows from operating activities
Net earnings	$	2,268	$	5,421
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	369		401
Amortization of intangible assets	4,018		3,704
Deferred income taxes	(635)		(794)
Change in fair value of contingent consideration liabilities	3,424		861
Stock-based compensation	492		413
Acquired IPR&D and milestones	430		414
Gain on divestitures	—		(172)
Non-cash litigation reserve adjustments, net of cash payments	(118)		2,190
Impairment of intangible assets	710		—
Other, net	(173)		(86)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable	(275)		(1,396)
Inventories	(458)		(499)
Prepaid expenses and other assets	285		14
Accounts payable and other liabilities	1,107		(448)
Income tax assets and liabilities, net	(932)		(110)
Cash flows from operating activities	10,512		9,913
Cash flows from investing activities
Acquisitions and investments	(513)		(394)
Acquisitions of property and equipment	(353)		(305)
Purchases of investment securities	(35)		(1,411)
Sales and maturities of investment securities	36		50
Other, net	25		599
Cash flows from investing activities	(840)		(1,461)
Cash flows from financing activities
Proceeds from issuance of long-term debt	—		2,000
Repayments of long-term debt and finance lease obligations	(2,353)		(4,881)
Dividends paid	(5,286)		(5,033)
Purchases of treasury stock	(1,965)		(1,479)
Proceeds from the exercise of stock options	113		198
Payments of contingent consideration liabilities	(641)		(482)
Other, net	20		26
Cash flows from financing activities	(10,112)		(9,651)
Effect of exchange rate changes on cash and equivalents	(2)		(26)
Net change in cash and equivalents	(442)		(1,225)
Cash and equivalents, beginning of period	9,201		9,746
Cash and equivalents, end of period	$	8,759	$	8,521

The accompanying notes are an integral part of these condensed consolidated financial statements.

2023 Form 10-Q | 5

AbbVie Inc. and Subsidiaries

Notes to Condensed Consolidated Financial Statements (unaudited)

Note 1 Basis of Presentation Basis of Historical Presentation

The unaudited interim condensed consolidated financial statements of AbbVie Inc. (AbbVie or the company) have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) have been omitted. These unaudited interim condensed consolidated financial statements should be read in conjunction with the company’s audited consolidated financial statements and notes included in the company’s Annual Report on Form 10-K for the year ended December 31, 2022.

It is management’s opinion that these financial statements include all normal and recurring adjustments necessary for a fair presentation of the company’s financial position and operating results. Net revenues and net earnings for any interim period are not necessarily indicative of future or annual results. Certain other reclassifications were made to conform the prior period interim condensed consolidated financial statements to the current period presentation.

Note 2 Supplemental Financial InformationInterest Expense, Net

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Interest expense	$	552	$	556	$	1,105	$	1,104
Interest income	(98)		(24)		(197)		(33)
Interest expense, net	$	454	$	532	$	908	$	1,071

Inventories

(in millions)	June 30, 2023		December 31, 2022
Finished goods	$	1,177	$	1,162
Work-in-process	1,606		1,417
Raw materials	1,272		1,000
Inventories	$	4,055	$	3,579

Property and Equipment, Net

(in millions)	June 30, 2023		December 31, 2022
Property and equipment, gross	$	11,318	$	10,986
Accumulated depreciation	(6,375)		(6,051)
Property and equipment, net	$	4,943	$	4,935

Depreciation expense was $190 million for the three months and $369 million for the six months ended June 30, 2023 and $203 million for the three months and $401 million for the six months ended June 30, 2022.

2023 Form 10-Q | 6

Note 3 Earnings Per ShareAbbVie grants certain restricted stock units (RSUs) that are considered to be participating securities. Due to the presence of participating securities, AbbVie calculates earnings per share (EPS) using the more dilutive of the treasury stock or the two-class method. For all periods presented, the two-class method was more dilutive.

The following table summarizes the impact of the two-class method:

	Three months ended June 30,				Six months ended June 30,
(in millions, except per share data)	2023		2022		2023		2022
Basic EPS
Net earnings attributable to AbbVie Inc.	$	2,024	$	924	$	2,263	$	5,414
Earnings allocated to participating securities	11		11		22		26
Earnings available to common shareholders	$	2,013	$	913	$	2,241	$	5,388
Weighted-average basic shares outstanding	1,767		1,770		1,768		1,770
Basic earnings per share attributable to AbbVie Inc.	$	1.14	$	0.52	$	1.27	$	3.04
Diluted EPS
Net earnings attributable to AbbVie Inc.	$	2,024	$	924	$	2,263	$	5,414
Earnings allocated to participating securities	11		11		22		26
Earnings available to common shareholders	$	2,013	$	913	$	2,241	$	5,388
Weighted-average shares of common stock outstanding	1,767		1,770		1,768		1,770
Effect of dilutive securities	4		6		5		7
Weighted-average diluted shares outstanding	1,771		1,776		1,773		1,777
Diluted earnings per share attributable to AbbVie Inc.	$	1.14	$	0.51	$	1.26	$	3.03

Certain shares issuable under stock-based compensation plans were excluded from the computation of EPS because the effect would have been antidilutive. The number of common shares excluded was insignificant for all periods presented.

Note 4 Licensing, Acquisitions and Other Arrangements

Other Licensing & Acquisitions Activity

Cash outflows related to acquisitions and investments totaled $513 million for the six months ended June 30, 2023 and $394 million for the six months ended June 30, 2022. AbbVie recorded acquired IPR&D and milestones expense of $280 million for the three months and $430 million for the six months ended June 30, 2023 and $269 million for the three months and $414 million for the six months ended June 30, 2022.

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 $130 million which was recorded to acquired IPR&D and milestones expense in the condensed consolidated statement of earnings in the first quarter of 2022. The agreement also includes additional future payments of up to $870 million upon the achievement of certain development, regulatory and commercial milestones.

Juvise Pharmaceuticals

In June 2022, AbbVie and Laboratories Juvise Pharmaceuticals (Juvise) entered into an asset purchase agreement where Juvise acquired worldwide commercial rights of a mature brand Pylera, which is used for the treatment of peptic ulcers with an infection by the bacterium Helicobacter pylori. The transaction was accounted for as the sale of an asset. Upon completion of the transaction,

2023 Form 10-Q | 7

AbbVie received net cash proceeds of $215 million and recognized a pre-tax gain of $172 million which was recorded in other operating income in the condensed consolidated statement of earnings in the second quarter of 2022.

Other Arrangements

AbbVie entered into several other arrangements resulting in charges related to upfront payments of $220 million for the three months and $352 million for the six months ended June 30, 2023 and $222 million for the three and six months ended June 30, 2022. Acquired IPR&D and milestones expense also included development milestones of $60 million for the three months and $78 million for the six months ended June 30, 2023 and $47 million for the three months and $62 million for the six months ended June 30, 2022.

Note 5 CollaborationsThe company has ongoing transactions with other entities through collaboration agreements. The following represent the significant collaboration agreements impacting the periods ended June 30, 2023 and 2022.

Collaboration with Janssen Biotech, Inc.

In December 2011, Pharmacyclics, a wholly-owned subsidiary of AbbVie, entered into a worldwide collaboration and license agreement with Janssen Biotech, Inc. and its affiliates (Janssen), one of the Janssen Pharmaceutical companies of Johnson & Johnson, for the joint development and commercialization of Imbruvica, a novel, orally active, selective covalent inhibitor of Bruton’s tyrosine kinase and certain compounds structurally related to Imbruvica, for oncology and other indications, excluding all immune and inflammatory mediated diseases or conditions and all psychiatric or psychological diseases or conditions, in the United States and outside the United States.

The collaboration provides Janssen with an exclusive license to commercialize Imbruvica outside of the United States and co-exclusively with AbbVie in the United States. Both parties are responsible for the development, manufacturing and marketing of any products generated as a result of the collaboration. The collaboration has no set duration or specific expiration date and provides for potential future development, regulatory and approval milestone payments of up to $200 million to AbbVie. The collaboration also includes a cost sharing arrangement for associated collaboration activities. Except in certain cases, Janssen is responsible for approximately 60% of collaboration development costs and AbbVie is responsible for the remaining 40% of collaboration development costs.

In the United States, both parties have co-exclusive rights to commercialize the products; however, AbbVie is the principal in the end-customer product sales. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. Sales of Imbruvica are included in AbbVie's net revenues. Janssen's share of profits is included in AbbVie's cost of products sold. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

Outside the United States, Janssen is responsible for and has exclusive rights to commercialize Imbruvica. AbbVie and Janssen share pre-tax profits and losses equally from the commercialization of products. AbbVie's share of profits is included in AbbVie's net revenues. Other costs incurred under the collaboration are reported in their respective expense line items, net of Janssen's share.

The following table shows the profit and cost sharing relationship between Janssen and AbbVie:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
United States - Janssen's share of profits (included in cost of products sold)	$	312	$	404	$	609	$	812
International - AbbVie's share of profits (included in net revenues)	241		283		481		582
Global - AbbVie's share of other costs (included in respective line items)	57		69		112		133

AbbVie’s receivable from Janssen, included in accounts receivable, net, was $268 million at June 30, 2023 and $295 million at December 31, 2022. AbbVie’s payable to Janssen, included in accounts payable and accrued liabilities, was $295 million at June 30, 2023 and $379 million at December 31, 2022.

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

2023 Form 10-Q | 8

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 selling, general and administrative (SG&A) expenses and global development costs as part of research and development (R&D) expenses, net of Genentech’s share. Royalties paid for Venclexta revenues outside the United States are also included in AbbVie’s cost of products sold.

The following table shows the profit and cost sharing relationship between Genentech and AbbVie:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Genentech's share of profits, including royalties (included in cost of products sold)	$	214	$	196	$	416	$	374
AbbVie's share of sales and marketing costs from U.S. collaboration (included in SG&A)	8		5		19		17
AbbVie's share of development costs (included in R&D)	30		31		58		58

    

Note 6 Goodwill and Intangible AssetsGoodwill

The following table summarizes the changes in the carrying amount of goodwill:

(in millions)
Balance as of December 31, 2022	$	32,156
Foreign currency translation adjustments	68
Balance as of June 30, 2023	$	32,224

The company performs its annual goodwill impairment assessment in the third quarter, or earlier if impairment indicators exist. As of June 30, 2023, there were no accumulated goodwill impairment losses.

Intangible Assets, Net

The following table summarizes intangible assets:

	June 30, 2023						December 31, 2022
(in millions)	Gross carrying amount		Accumulated amortization		Net carrying amount		Gross carrying amount		Accumulated amortization		Net carrying amount
Definite-lived intangible assets
Developed product rights	$	87,702	$	(28,400)	$	59,302	$	87,698	$	(25,003)	$	62,695
License agreements	8,474		(5,207)		3,267		8,474		(4,642)		3,832
Total definite-lived intangible assets	96,176		(33,607)		62,569		96,172		(29,645)		66,527
Indefinite-lived intangible assets	293		—		293		912		—		912
Total intangible assets, net	$	96,469	$	(33,607)	$	62,862	$	97,084	$	(29,645)	$	67,439

Definite-Lived Intangible Assets

Amortization expense was $2.1 billion for the three months and $4.0 billion for the six months ended June 30, 2023 and $1.8 billion for the three months and $3.7 billion for the six months ended June 30, 2022. Amortization expense was included in cost of products sold in the condensed consolidated statements of earnings.

The company monitors intangible assets for impairment on a quarterly basis. The definite-lived intangible asset related to Imbruvica in the United States has a carrying value of $4.3 billion as of June 30, 2023. Estimated future cash flows are not significantly higher than the intangible asset’s carrying value, reflecting the company’s current expectations of the impact of the Inflation Reduction Act

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of 2022. Future changes to the company’s estimates of the impact of the Inflation Reduction Act and the potential of government selection for price negotiations as well as regulatory, market and competitive developments could unfavorably impact the company’s ability to recover the carrying value of the related intangible asset. It is reasonably possible that an intangible asset impairment may occur in future periods, which may have a material effect on AbbVie’s results of operations.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets represent acquired IPR&D associated with products that have not yet received regulatory approval. The company performs its annual impairment assessment of indefinite-lived intangible assets in the third quarter, or earlier if impairment indicators exist.

During the first quarter of 2023, the company made a decision to revise the research and development plan for AGN-151607, a novel investigational neurotoxin for the prevention of postoperative atrial fibrillation in cardiac surgery patients. This decision contributed to a delay in the estimated timing of regulatory approval as well as a significant decrease in estimated future cash flows of the product and represented a triggering event which required the company to evaluate the underlying indefinite-lived intangible asset for impairment. The company utilized a discounted cash flow analysis to estimate the fair value which was below the carrying value of the intangible asset. Based on the revised cash flows, the company recorded a pre-tax impairment charge of $630 million to research and development expense in the condensed consolidated statement of earnings for the first quarter of 2023.

Note 7 Integration and Restructuring Plans

Allergan Integration Plan

Following the closing of the Allergan acquisition, AbbVie implemented an integration plan designed to reduce costs, integrate and optimize the combined organization and incurred total cumulative charges of $2.4 billion through June 30, 2023. These costs consist of severance and employee benefit costs (cash severance, non-cash severance including accelerated equity award compensation expense, retention and other termination benefits) and other integration expenses.

The following table summarizes the charges (benefits) associated with the Allergan acquisition integration plan:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2023		2022		2023		2022
Cost of products sold	$	32	$	26	$	46	$	57
Research and development	1		1		1		10
Selling, general and administrative	51		76		95		146
Total charges	$	84	$	103	$	142	$	213

The following table summarizes the cash activity in the recorded liability associated with the Allergan integration plan for the six months ended June 30, 2023:

(in millions)
Accrued balance as of December 31, 2022	$	107
Charges	135
Payments and other adjustments	(195)
Accrued balance as of June 30, 2023	$	47

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Other Restructuring

AbbVie recorded restructuring charges of $18 million for the three months and $45 million for the six months ended June 30, 2023 and $36 million for the three months and $93 million for the six months ended June 30, 2022.

The following table summarizes the cash activity in the restructuring reserve for the six months ended June 30, 2023:

(in millions)
Accrued balance as of December 31, 2022	$	176
Restructuring charges	24
Payments and other adjustments	(51)
Accrued balance as of June 30, 2023	$	149

Note 8 Financial Instruments and Fair Value MeasuresRisk Management Policy

See Note 11 to the company’s Annual Report on Form 10-K for the year ended December 31, 2022 for a summary of AbbVie’s risk management policy and use of derivative instruments.

Financial Instruments

Various AbbVie foreign subsidiaries enter into foreign currency forward exchange contracts to manage exposures to changes in foreign exchange rates for anticipated intercompany transactions denominated in a currency other than the functional currency of the local entity. These contracts, with notional amounts totaling $2.2 billion at June 30, 2023 and $1.7 billion at December 31, 2022, are designated as cash flow hedges and are recorded at fair value. The durations of these forward exchange contracts were generally less than 18 months. Accumulated gains and losses as of June 30, 2023 are reclassified from accumulated other comprehensive income (loss) (AOCI) and included in cost of products sold at the time the products are sold, generally not exceeding six months from the date of settlement.

In 2019, the company entered into treasury rate lock agreements with notional amounts totaling $10.0 billion to hedge exposure to variability in future cash flows resulting from changes in interest rates related to the issuance of long-term debt in connection with the acquisition of Allergan. The treasury rate lock agreements were designated as cash flow hedges and recorded at fair value. The agreements were net settled upon issuance of the senior notes in 2019 and the resulting net gain was 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 with a notional amount totaling €433 million to hedge the company’s exposure to changes in future cash flows of foreign currency denominated debt related to changes in foreign exchange rates. The cross-currency swap contract was designated as a cash flow hedge and effectively converted the interest and principal payments of the related foreign currency denominated debt to U.S. dollars. The unrealized gains and losses on the contract are included in AOCI and are reclassified to net foreign exchange loss over the term of the related debt.

The company also enters into foreign currency forward exchange contracts to manage its exposure to foreign currency denominated trade payables and receivables and intercompany loans. These contracts are not designated as hedges and are recorded at fair value. Resulting gains or losses are reflected in net foreign exchange gain or loss in the condensed consolidated statements of earnings and are generally offset by losses or gains on the foreign currency exposure being managed. These contracts had notional amounts totaling $10.7 billion at June 30, 2023 and $6.5 billion at December 31, 2022.

The company also uses foreign currency forward exchange contracts or foreign currency denominated debt to hedge its net investments in certain foreign subsidiaries and affiliates. The company had an aggregate principal amount of senior Euro notes designated as net investment hedges of €5.4 billion at June 30, 2023 and €5.9 billion at December 31, 2022. In addition, the company had foreign currency forward exchange contracts designated as net investment hedges with notional amounts totaling €4.2 billion, SEK1.4 billion, CAD750 million and CHF50 million at June 30, 2023 and €4.3 billion, SEK2.0 billion, CAD750 million and CHF90 million at December 31, 2022. 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

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initial fair value of hedge components excluded from the assessment of effectiveness is recognized in interest expense, net over the life of the hedging instrument.

The company is a party to interest rate swap contracts designated as fair value hedges with notional amounts totaling $5.0 billion at June 30, 2023 and $4.5 billion at December 31, 2022. The effect of the hedge contracts is to change a fixed-rate interest obligation to a floating rate for that portion of the debt. AbbVie records the contracts at fair value and adjusts the carrying amount of the fixed-rate debt by an offsetting amount.

No amounts are excluded from the assessment of effectiveness for cash flow hedges or fair value hedges.

The following table summarizes the amounts and location of AbbVie’s derivative instruments on the condensed consolidated balance sheets:

	Fair value – Derivatives in asset position					Fair value – Derivatives in liability position
(in millions)	Balance sheet caption	June 30, 2023		December 31, 2022		Balance sheet caption	June 30, 2023		December 31, 2022
Foreign currency forward exchange contracts
Designated as cash flow hedges	Prepaid expenses and other	$	32	$	49	Accounts payable and accrued liabilities	$	9	$	8
Designated as cash flow hedges	Other assets	1		1		Other long-term liabilities	1		—
Designated as net investment hedges	Prepaid expenses and other	3		6