AbbVie 2012 Annual Report Download - page 178

conduct of the AbbVie business by Abbott in such countries until the local separation is completed,
and provides that AbbVie will be subject to all the risks and burdens and entitled to all the benefits
generated by the AbbVie business during such period. The international commercial operations
agreements also govern the process for the local separation of AbbVie’s business following the
distribution date. The agreements expire on the earlier of the last local separation date and the second
anniversary of the distribution date (or, in the case of Brazil, the third anniversary of the distribution
date).
Information Technology Agreement
AbbVie and Abbott entered into an information technology agreement that provides for the
separation of various information technology systems and services that AbbVie currently shares with
Abbott. The information technology agreement specifies the parties’ responsibilities and allocation of
associated project costs to effect the separation of the information technology systems. The information
technology agreement will terminate two years from the distribution date, with an option for a one-year
extension. Either AbbVie or Abbott can generally terminate a project under which it is receiving
services on 90 days’ notice in order to transfer to itself the control and responsibility for that project.
The information technology agreement does not otherwise contain any rights of AbbVie or Abbott to
terminate the agreement.
Manufacturing and Supply Agreements
AbbVie entered into finished good supply agreements and contract manufacturing agreements with
Abbott pursuant to which AbbVie or Abbott, as the case may be, has agreed to manufacture, label, and
package products for the other party. Under the finished goods supply agreements, Abbott will
manufacture for AbbVie the active pharmaceutical ingredients for Trilipix, Depakote, and Biaxin, in
each case to be sold in the United States. Abbott will also supply to AbbVie the active pharmaceutical
ingredient for Tarka to be sold in the United States and for Luvox to be sold in Japan. In addition,
Abbott will manufacture for AbbVie Creon to be sold in the United States, and tubing for Duodopa.
Under the contract manufacturing agreements, Abbott will provide AbbVie with local packaging
services for HUMIRA, Kaletra, Norvir, and Synagis for Japan, local packaging services for HUMIRA,
Kaletra, Lupron, Norvir, Simdax, Survanta, Synagis, and Zemplar for Mexico, local packaging services
for HUMIRA, Kaletra, Norvir, and Survanta for Argentina, and local filling and packaging services for
Sevoflurane (for human use) and Forane for Latin America. In addition, AbbVie entered into finished
goods supply agreements and contract manufacturing agreements with Abbott to manufacture Special
Products and certain other pharmaceutical products for Abbott.
These manufacturing and supply agreements have a term of up to five years. Either party may
terminate an agreement upon a material breach by the other party that is not cured within 30 days, if
the other party is debarred or becomes insolvent or bankrupt, or if a governmental authority ruling or
interpretation makes it impossible to continue the agreement. The purchasing party may also terminate
an agreement if the manufacturing party materially violates applicable law, or if there is a recall of
products due to the manufacturing party’s negligence, recklessness, willful misconduct, or material
breach of the agreement.
Under the finished goods supply agreements, the party purchasing finished goods pays a fixed
product cost, and the manufacturing party is responsible for all costs associated with the manufacture
of products, including the costs of raw materials and active pharmaceutical ingredients. Under the
contract manufacturing agreements, the party purchasing goods provides the manufacturing party with
active pharmaceutical ingredients or unfinished goods and pays for the services provided by the
manufacturing party.
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