AbbVie 2012 Annual Report Download - page 21

intellectual property infringement could subject AbbVie to significant damages or an injunction
preventing the manufacture, sale, or use of the affected AbbVie product or products. Any of these
events could have a material adverse effect on AbbVie’s profitability and financial condition.
Any significant event that adversely affects HUMIRA revenues could have a material and negative impact on
AbbVie’s results of operations and cash flows.
HUMIRA generates approximately 50 percent of AbbVie’s sales. Any significant event that
adversely affects HUMIRA’s revenues could have a material adverse impact on AbbVie’s operations
and cash flows. These events could include loss of patent protection for HUMIRA, the approval of
biosimilars of HUMIRA, the discovery of previously unknown side effects or impaired efficacy,
increased competition from the introduction of new, more effective or less expensive treatments, and
discontinuation or removal from the market of HUMIRA for any reason.
AbbVie’s research and development efforts may not succeed in developing and marketing commercially
successful products and technologies, which may cause its revenue and profitability to decline.
To remain competitive, AbbVie must continue to launch new products and new indications and/or
brand extensions for existing products, and such launches must generate revenue sufficient both to
cover its substantial research and development costs and to replace sales of profitable products that are
lost to or displaced by competing products or therapies. Failure to do so would have a material adverse
effect on AbbVie’s revenue and profitability. Accordingly, AbbVie commits substantial effort, funds,
and other resources to research and development and must make ongoing substantial expenditures
without any assurance that its efforts will be commercially successful. For example, in 2012 AbbVie
discontinued the development of ABT-263, which was in Phase II development for the treatment of
hematologic malignancies. A high rate of failure in the biopharmaceutical industry is inherent in the
research and development of new products, and failure can occur at any point in the research and
development process, including after significant funds have been invested. Products that appear
promising in development may fail to reach the market for numerous reasons, including failure to
demonstrate effectiveness, safety concerns, superior safety or efficacy of competing therapies, failure to
achieve positive clinical or pre-clinical outcomes beyond the current standard of care, inability to obtain
necessary regulatory approvals or delays in the approval of new products and new indications, limited
scope of approved uses, excessive costs to manufacture, the failure to obtain or maintain intellectual
property rights, or infringement of the intellectual property rights of others.
Decisions about research studies made early in the development process of a pharmaceutical
product candidate can affect the marketing strategy once such candidate receives approval. More
detailed studies may demonstrate additional benefits that can help in the marketing, but they also
consume time and resources and may delay submitting the pharmaceutical product candidate for
approval. AbbVie cannot guarantee that a proper balance of speed and testing will be made with
respect to each pharmaceutical product candidate or that decisions in this area would not adversely
affect AbbVie’s future results.
Even if AbbVie successfully develops and markets new products or enhancements to its existing
products, they may be quickly rendered obsolete by changing clinical preferences, changing industry
standards, or competitors’ innovations. AbbVie’s innovations may not be accepted quickly in the
marketplace because of existing clinical practices or uncertainty over third-party reimbursement.
AbbVie cannot state with certainty when or whether any of its products under development will be
launched, whether it will be able to develop, license, or otherwise acquire compounds or products, or
whether any products will be commercially successful. Failure to launch successful new products or new
indications for existing products may cause AbbVie’s products to become obsolete, causing AbbVie’s
revenues and operating results to suffer.
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