AbbVie 2014 Annual Report Download - page 28

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As AbbVie builds its information technology infrastructure and transitions its data to its own
systems, AbbVie could incur substantial additional costs and experience temporary business interruptions.
AbbVie is installing and implementing information technology infrastructure to support its critical
business functions, including accounting and reporting, manufacturing process control, customer service,
inventory control and distribution. AbbVie may incur temporary interruptions in business operations if it
cannot transition effectively from Abbott’s existing transactional and operational systems, data centers and
the transition services that support these functions as AbbVie replaces these systems. AbbVie may not be
successful in implementing its new systems and transitioning its data, and it may incur substantially higher
costs for implementation than currently anticipated. AbbVie’s failure to avoid operational interruptions as it
implements the new systems and replaces Abbott’s information technology services, or its failure to
implement the new systems and replace Abbott’s services successfully, could disrupt its business, adversely
affect its ability to collect receivables from customers, and have a material adverse effect on its profitability.
In addition, if AbbVie is unable to replicate or transition certain systems, its ability to comply with
regulatory requirements could be impaired.
Abbott may fail to perform under various transaction agreements that have been executed as part
of the separation or AbbVie may fail to have necessary systems and services in place when certain of the
transaction agreements expire.
In connection with the separation, AbbVie and Abbott entered into a separation and distribution
agreement and various other agreements, including transition services agreements, a tax sharing
agreement, international commercial operations agreements, finished goods supply agreements, contract
manufacturing agreements, an employee matters agreement, a special products master agreement, an
information technology agreement, and a transitional trademark license agreement. Certain of these
agreements provide for the performance of services by each company for the benefit of the other for a
period of time after AbbVie’s separation from Abbott. AbbVie relies on Abbott to satisfy its performance
and payment obligations under these agreements. If Abbott is unable to satisfy its obligations under these
agreements, including its indemnification obligations, AbbVie could incur operational difficulties or losses.
In addition, AbbVie and Abbott entered into long-term arrangements under a special products master
agreement relating to certain product rights and into an ex-U.S. transition services agreement for Abbott to
provide AbbVie with back office functions and other services in certain markets outside the United States
until AbbVie has established sufficient back office infrastructure to conduct operations in such markets.
These arrangements could lead to disputes between Abbott and AbbVie over AbbVie’s rights to certain
intellectual property and territorial commercialization rights and over the allocation of costs and revenues
for AbbVie’s products and operations outside of the United States.
If AbbVie does not have in place its own systems and services, or if AbbVie does not have agreements
with other providers of these services when the transaction or long-term agreements terminate, AbbVie
may not be able to operate its business effectively and its profitability may decline. AbbVie is in the
process of creating its own, or engaging third parties to provide, systems and services to replace many of
the systems and services Abbott currently provides to it. AbbVie may not be successful in effectively or
efficiently implementing these systems and services or in transitioning data from Abbott’s systems to
AbbVie’s. These systems and services may also be more expensive or less efficient than the systems and
services Abbott is expected to provide during the transition period.
AbbVie is developing and implementing its own back office functions, administrative systems,
personnel, and processes for markets outside the United States where Abbott will initially provide such
functions. There can be no assurance that AbbVie will be able to fully implement such functions effectively
and without disrupting its business in those markets.
22 2014 Form 10-K