AbbVie 2013 Annual Report Download - page 11

AbbVie also has collaboration agreements, as discussed in Note 5, ‘‘Acquisitions, Collaborations
and Other Arrangements,’’ of the Notes to Consolidated Financial Statements, and has certain
agreements with Abbott.
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.
Orders
Orders are generally filled on a current basis, and order backlog is not material to AbbVie’s
business.
Environmental Matters
AbbVie believes that its operations comply in all material respects with applicable laws and
regulations concerning environmental protection. Regulations under federal and state environmental
laws impose stringent limitations on emissions and discharges to the environment from various
manufacturing operations. AbbVie’s capital and operating expenditures for pollution control in 2013
were approximately $2 million and $20 million, respectively. Capital and operating expenditures for
pollution control in 2014 are estimated to be approximately $2 million and $21 million, respectively.
Abbott was identified as one of many potentially responsible parties in investigations and/or
remediations at several locations in the United States, including Puerto Rico, under the Comprehensive
Environmental Response, Compensation, and Liability Act, commonly known as Superfund. Some of
these locations were transferred to AbbVie in connection with the separation and distribution, and
AbbVie has become a party to these investigations and remediations. Abbott was also engaged in
remediation at several other sites, some of which have been transferred to AbbVie in connection with
the separation and distribution, in cooperation with the Environmental Protection Agency or similar
agencies. While it is not feasible to predict with certainty the final costs related to those investigations
and remediation activities, AbbVie believes that such costs, together with other expenditures to
maintain compliance with applicable laws and regulations concerning environmental protection, should
not have a material adverse effect on the company’s financial position, cash flows, or results of
operations.
Competition
The markets for AbbVie’s products are highly competitive. AbbVie competes with other research-
based pharmaceuticals and biotechnology companies that discover, manufacture, market, and sell
proprietary pharmaceutical products and biologics. For example, HUMIRA competes with a number of
anti-TNF and other products that are approved for a number of disease states and AbbVie’s virology
products compete with protease inhibitors and other anti-HIV treatments. The search for technological
innovations in pharmaceutical products is a significant aspect of competition. The introduction of new
products by competitors and changes in medical practices and procedures can result in product
obsolescence. Price is also a competitive factor. In addition, the substitution of generic pharmaceutical
products for branded pharmaceutical products creates competitive pressures on AbbVie’s products that
do not have patent protection.
Biosimilars. Competition for AbbVie’s biologic products is affected by the approval of follow-on
biologics, also known as ‘‘biosimilars.’’ Biologics have added major therapeutic options for the
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