AbbVie 2014 Annual Report Download - page 19

13NOV201221352027
competitive position is compromised because of generics or otherwise, it could have a material adverse
effect on AbbVie’s business and results of operations. In addition, proposals emerge from time to time for
legislation to further encourage the early and rapid approval of generic drugs. Any such proposals that are
enacted into law could increase the impact of generic competition.
AbbVie’s principal patents and trademarks are described in greater detail in Item 1, ‘‘Business—
Intellectual Property Protection and Regulatory Exclusivity’’ and Item 7, ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Results of Operations,’’ and litigation regarding
these patents is described in Item 3, ‘‘Legal Proceedings.’’ The United States composition of matter patent
for HUMIRA, which is AbbVie’s largest selling product and had worldwide net sales of approximately
$12.5 billion in 2014, is expected to expire in December 2016, and the equivalent European Union patent is
expected to expire in the majority of European Union countries in April 2018. Because HUMIRA is a biologic
and biologics cannot be readily substituted, it is uncertain what impact the loss of patent protection would
have on the sales of HUMIRA.
AbbVie’s major products could lose patent protection earlier than expected, which could adversely
affect AbbVie’s future revenues and operating earnings.
Third parties or government authorities may challenge or seek to invalidate or circumvent AbbVie’s
patents and patent applications. For example, manufacturers of generic pharmaceutical products file, and
may continue to file, Abbreviated New Drug Applications with the FDA seeking to market generic forms of
AbbVie’s products prior to the expiration of relevant patents owned or licensed by AbbVie by asserting that
the patents are invalid, unenforceable and/or not infringed.
Although most of the challenges to AbbVie’s intellectual property have come from other businesses,
governments may also challenge intellectual property rights. For example, court decisions and potential
legislation relating to patents, such as legislation regarding biosimilars, and other regulatory initiatives may
result in further erosion of intellectual property protection. In addition, certain governments outside the
United States have indicated that compulsory licenses to patents may be sought to further their domestic
policies or on the basis of national emergencies, such as HIV/AIDS. If triggered, compulsory licenses could
diminish or eliminate sales and profits from those jurisdictions and negatively affect AbbVie’s results of
operations.
AbbVie normally responds to challenges by vigorously defending its patents, including by filing patent
infringement lawsuits. Patent litigation and other challenges to AbbVie’s patents are costly and
unpredictable and may deprive AbbVie of market exclusivity for a patented product. To the extent AbbVie’s
intellectual property is successfully challenged or circumvented or to the extent such intellectual property
does not allow AbbVie to compete effectively, AbbVie’s business will suffer. To the extent that countries do
not enforce AbbVie’s intellectual property rights or require compulsory licensing of AbbVie’s intellectual
property, AbbVie’s future revenues and operating income will be reduced.
A third party’s intellectual property may prevent AbbVie from selling its products or have a material
adverse effect on AbbVie’s future profitability and financial condition.
Third parties may claim that an AbbVie product infringes upon their intellectual property. Resolving an
intellectual property infringement claim can be costly and time consuming and may require AbbVie to enter
into license agreements. AbbVie cannot guarantee that it would be able to obtain license agreements on
commercially reasonable terms. A successful claim of patent or other 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.
2014 Form 10-K 13