AbbVie 2012 Annual Report Download - page 28

Further deterioration in the economic position and credit quality of certain European countries may negatively
affect AbbVie’s results of operations.
Financial instability and fiscal deficits in certain European countries, including Greece, Italy,
Portugal, and Spain, may result in additional austerity measures to reduce costs, including health care
costs. If economic conditions continue to worsen, this could result in lengthening the time or reducing
the collectability of AbbVie’s outstanding trade receivables and increasing government efforts to reduce
health care spending, leading to reductions in drug prices and utilization of AbbVie’s products.
Ongoing sovereign debt issues in these countries could increase AbbVie’s collection risk given that a
significant amount of AbbVie’s receivables in these countries are with governmental health care
systems.
AbbVie may not be able to realize the expected benefits of its investments in emerging markets.
AbbVie seeks to make investments in key emerging markets, including Brazil, China, India,
Mexico, Russia, and Turkey, but cannot guarantee that its efforts to expand sales in these markets will
succeed. Some emerging markets may be especially vulnerable to periods of financial instability or may
have very limited resources to spend on health care. For AbbVie to successfully implement its emerging
markets strategy, AbbVie must attract and retain qualified personnel or may be required to increase its
reliance on third-party distributors within certain emerging markets. Many of these countries have
currencies that fluctuate substantially; if such currencies devalue and AbbVie cannot offset the
devaluations, its financial performance within such countries could be adversely affected. In addition,
price and currency exchange controls, limitations on participation in local enterprises, expropriation,
nationalization, and other governmental actions could affect AbbVie’s business and results of
operations in emerging markets.
AbbVie may acquire other businesses, license rights to technologies or products, form alliances, or dispose of
assets, which could cause it to incur significant expenses and could negatively affect profitability.
AbbVie may pursue acquisitions, technology licensing arrangements, and strategic alliances, or
dispose of some of its assets, as part of its business strategy. AbbVie may not complete these
transactions in a timely manner, on a cost-effective basis, or at all, and may not realize the expected
benefits. If AbbVie is successful in making an acquisition, the products and technologies that are
acquired may not be successful or may require significantly greater resources and investments than
originally anticipated. AbbVie may not be able to integrate acquisitions successfully into its existing
business and could incur or assume significant debt and unknown or contingent liabilities. AbbVie
could also experience negative effects on its reported results of operations from acquisition or
disposition-related charges, amortization of expenses related to intangibles and charges for impairment
of long-term assets. These effects could cause a deterioration of AbbVie’s credit rating and result in
increased borrowing costs and interest expense.
Additionally, changes in AbbVie’s structure, operations, revenues, costs, or efficiency resulting from
major transactions such as acquisitions, divestitures, mergers, alliances, restructurings or other strategic
initiatives, may result in greater than expected costs, may take longer than expected to complete or
encounter other difficulties, including the need for regulatory approval where appropriate.
AbbVie is dependent on wholesale distributors for distribution of its products in the United States and,
accordingly, its results of operations could be adversely affected if they encounter financial difficulties.
In 2012, three wholesale distributors—AmerisourceBergen Corporation, Cardinal Health, Inc. and
McKesson Corporation—accounted for substantially all of AbbVie’s sales in the United States. If one
of its significant wholesale distributors encounters financial or other difficulties, such distributor may
decrease the amount of business that it does with AbbVie, and AbbVie may be unable to collect all the
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