AbbVie 2014 Annual Report Download - page 40

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In 2014, the company generated cash flows from operations of $3.5 billion, net of the after-tax
transaction and financing-related costs incurred in connection with the terminated proposed combination
with Shire. These strong cash flows enabled the company to continue to enhance its pipeline through
licensing and collaboration activities, pay cash dividends to shareholders of $2.7 billion and repurchase
approximately 9 million shares for $550 million. In addition, the board of directors declared an increase in
the company’s quarterly cash dividend from $0.42 per share to $0.49 per share of common stock payable
in February 2015, as well as authorized a new $5.0 billion stock repurchase program that is expected to be
executed over the next several years.
In addition to these financial results, AbbVie continued to advance its pipeline during 2014, including
securing regulatory approval in the United States for AbbVie’s interferon-free HCV treatment, VIEKIRA PAK,
as well as submitting its regulatory application in the European Union, which was subsequently approved in
January 2015. AbbVie also continued to advance its previously submitted regulatory applications in the
United States for Duopa, which were subsequently approved in January 2015, and completed several
late-stage clinical trials, including ZINBRYTA (daclizumab) for the treatment of the relapsing/remitting form
of multiple sclerosis (MS) and registrational programs for an expanded use of HUMIRA for hidradenitis
suppurativa. AbbVie also augmented its pipeline through strategic licensing and partnering activities
including in-licensing duvelisib, a dual acting PI3 kinase inhibitor currently under investigation for use in a
variety of hematological malignancies, from Infinity and entering into a novel collaboration with Calico to
discover, develop, and commercialize new therapies for patients with age-related diseases.
2015 Strategic Objectives
In 2015, AbbVie expects sales performance to be driven by continued strong growth from HUMIRA, the
launch of VIEKIRA PAK, and sales growth in certain key products including Creon and Duodopa, partially
offset by a decline in several products due to generic competition, including AndroGel 1% and the
remainder of the lipid franchise. In addition, AbbVie expects to achieve operating margin improvements
while continuing to invest in its pipeline in support of opportunities in oncology, HCV, and immunology, as
well as continued investment in key products. AbbVie expects to grow operating cash flows in 2015, which
will enable the company to continue to augment its pipeline through concerted focus on strategic licensing,
acquisition and partnering activity and returning cash to shareholders via dividends and share repurchases.
AbbVie expects to continue to drive strong HUMIRA sales growth in several ways. AbbVie seeks to
expand the HUMIRA patient base by applying for regulatory approval of new indications for HUMIRA,
treating conditions such as uveitis and hidradenitis suppurativa. AbbVie will also seek to drive HUMIRA sales
growth by expanding its market share and its presence in underserved markets. AbbVie plans to continue
making investments in key emerging markets, including Brazil, China, and Russia.
Another key driver of AbbVie’s performance in 2015 will be VIEKIRA PAK, which is now approved in
the United States, the European Union and a number of other countries around the world. AbbVie expects
to support the successful launch of VIEKIRA in the United States by securing payor positions and patient
access and focusing commercial efforts on penetration in AbbVie-exclusive and parity accounts. The
company has launched VIEKIRAX in several European countries, including Germany, the United Kingdom and
Canada, and continues to work with various governments around the world to gain reimbursements
approvals.
AbbVie will continue its investment in products with historically stable sales levels, while making
adjustments as necessary to increase the value of its product portfolio. AbbVie plans to achieve this
objective in a variety of ways depending on product and circumstances by, for example, identifying supply
chain efficiencies, pursuing additional indications, and optimizing residual value as products reach the end
of exclusivity. AbbVie believes that its approach will allow the company to maintain a strong operating
margin.
34 2014 Form 10-K