AbbVie 2014 Annual Report Download - page 12

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pharmacies, and independent retailers from AbbVie-owned distribution centers and public warehouses.
Although there are no significant seasonal aspects to AbbVie’s business, AbbVie’s product sales may be
affected by end customer and retail buying patterns, fluctuations in wholesaler inventory levels, and other
factors.
In the United States, AbbVie distributes pharmaceutical products principally through independent
wholesale distributors, with some sales directly to pharmacies and patients. In 2014, three wholesale
distributors (McKesson Corporation, Cardinal Health, Inc., and AmerisourceBergen Corporation) accounted
for substantially all of AbbVie’s sales in the United States. No individual wholesaler accounted for greater
than 42 percent of AbbVie’s 2014 gross sales in the United States. Outside the United States, sales are
made either directly to customers or through distributors, depending on the market served. These
wholesalers purchase product from AbbVie under standard terms and conditions of sale.
Certain products are co-marketed or co-promoted with other companies. AbbVie has no single
customer that, if the customer were lost, would have a material adverse effect on the company’s business.
No material portion of AbbVie’s business is subject to renegotiation of profits or termination of
contracts at the election of the government.
Orders are generally filled on a current basis, and order backlog is not material to AbbVie’s business.
Third Party Agreements
AbbVie has agreements with third parties for process development, analytical services, and
manufacturing of certain products. AbbVie procures certain products and services from a limited number of
suppliers and, in some cases, a single supply source. For example, the filling and packaging of HUMIRA
syringes to be sold outside of the United States and Puerto Rico is performed by a single supplier at its two
different facilities. AbbVie does not currently believe that this agreement is material because AbbVie’s
business is not substantially dependent upon it. AbbVie maintains significant inventory of HUMIRA syringes
to reduce the risk of any supply disruption and its own syringe-filling and packaging facility in the United
States is approved to supply syringes to primary markets outside of the United States and Puerto Rico. In
addition, AbbVie has agreements with third parties for active pharmaceutical ingredient and product
manufacturing, formulation and development services, fill, finish, and packaging services, transportation,
and distribution and logistics services for certain products. AbbVie does not believe that these
manufacturing related agreements are material because AbbVie’s business is not substantially dependent on
any individual agreement. In most cases, AbbVie maintains alternate supply relationships that it can utilize
without undue disruption of its manufacturing processes if a third party fails to perform its contractual
obligations. AbbVie also maintains sufficient inventory of product to minimize the impact of any supply
disruption.
AbbVie is also party to certain collaborations and other arrangements, as discussed in Note 6,
‘‘Acquisitions, Collaborations and Other Arrangements,’’ of the Notes to Consolidated Financial Statements
included under Item 8, ‘‘Financial Statements and Supplementary Data,’’ and has certain agreements with
Abbott as discussed in Item 7, ‘‘Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Transition from Abbott and Cost to Operate as an Independent Company.’’
Sources and Availability of Raw Materials
AbbVie purchases, in the ordinary course of business, raw materials and supplies essential to its
operations from numerous suppliers around the world, including in the United States. In addition, certain
medical devices and components necessary for the manufacture of our products are provided by
unaffiliated third party suppliers. AbbVie has not experienced any recent significant availability problems or
supply shortages for forecasted sales.
62014 Form 10-K