AbbVie 2014 Annual Report Download - page 22

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of new products or technological advances. Such competing products may be safer, more effective, more
effectively marketed or sold, or have lower prices or superior performance features than AbbVie’s products,
and this could negatively impact AbbVie’s business and results of operations.
The manufacture of many of AbbVie’s products is a highly exacting and complex process, and if
AbbVie or one of its suppliers encounters problems manufacturing AbbVie’s products, AbbVie’s business
could suffer.
The manufacture of many of AbbVie’s products is a highly exacting and complex process, due in part
to strict regulatory requirements. Problems may arise during manufacturing for a variety of reasons,
including equipment malfunction, failure to follow specific protocols and procedures, problems with raw
materials, delays related to the construction of new facilities or the expansion of existing facilities, including
those intended to support future demand for AbbVie’s products, changes in manufacturing production sites
and limits to manufacturing capacity due to regulatory requirements, changes in the types of products
produced, physical limitations that could inhibit continuous supply, man-made or natural disasters, and
environmental factors. If problems arise during the production of a batch of product, that batch of product
may have to be discarded and AbbVie may experience product shortages or incur added expenses. This
could, among other things, lead to increased costs, lost revenue, damage to customer relations, time and
expense spent investigating the cause and, depending on the cause, similar losses with respect to other
batches or products. If problems are not discovered before the product is released to the market, recall
and product liability costs may also be incurred.
AbbVie uses a number of products in its pharmaceutical and biologic manufacturing processes that
are sourced from single suppliers, and an interruption in the supply of those products could adversely
affect AbbVie’s business and results of operations.
AbbVie uses a number of products in its pharmaceutical and biologic manufacturing processes that are
sourced from single suppliers. The failure of these single-source suppliers to fulfill their contractual
obligations in a timely manner or as a result of regulatory noncompliance or physical disruption at a
manufacturing site may impair AbbVie’s ability to deliver its products to customers on a timely and
competitive basis, which could adversely affect AbbVie’s business and results of operations. Finding an
alternative supplier could take a significant amount of time and involve significant expense due to the
nature of the products and the need to obtain regulatory approvals. AbbVie cannot guarantee that it will
be able to reach agreement with alternative providers or that regulatory authorities would approve
AbbVie’s use of such alternatives. AbbVie does, however, carry business interruption insurance, which
provides a degree of protection in the case of a failure by a single-source supplier.
Significant safety or efficacy issues could arise for AbbVie’s products, which could have a material
adverse effect on AbbVie’s revenues and financial condition.
Pharmaceutical products receive regulatory approval based on data obtained in controlled clinical trials
of limited duration. Following regulatory approval, these products will be used over longer periods of time
in many patients. Investigators may also conduct additional, and perhaps more extensive, studies. If new
safety or efficacy issues are reported or if new scientific information becomes available (including results of
post-marketing Phase 4 trials), or if governments change standards regarding safety, efficacy or labeling,
AbbVie may be required to amend the conditions of use for a product. For example, AbbVie may
voluntarily provide or be required to provide updated information on a product’s label or narrow its
approved indication, either of which could reduce the product’s market acceptance. If safety or efficacy
issues with an AbbVie product arise, sales of the product could be halted by AbbVie or by regulatory
authorities. Safety or efficacy issues affecting suppliers’ or competitors’ products also may reduce the
market acceptance of AbbVie’s products.
16 2014 Form 10-K