AbbVie 2013 Annual Report Download - page 39

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is a discussion and analysis of the financial condition of AbbVie Inc. (AbbVie or the
company) and results of operations as of and for each of the three years in the period ended
December 31, 2013. This commentary should be read in conjunction with the consolidated financial
statements and accompanying notes appearing in Item 8, ‘‘Financial Statements and Supplementary
Data.’’
EXECUTIVE OVERVIEW
Company Overview
AbbVie is a global, research-based biopharmaceutical company. AbbVie develops and markets
advanced therapies that address some of the world’s most complex and serious diseases. AbbVie
products are used to treat chronic autoimmune diseases, including rheumatoid arthritis, psoriasis, and
Crohn’s disease; low testosterone; HIV; endometriosis; thyroid disease; Parkinson’s disease; and
complications associated with chronic kidney disease (CKD) and cystic fibrosis, among other health
conditions. AbbVie also has a pipeline of promising new medicines, including more than 20 compounds
or indications in Phase II or Phase III development across such important medical specialties as
immunology, virology, oncology, renal disease, neurological diseases and women’s health.
In the United States, AbbVie’s products are generally sold directly to wholesalers, distributors,
government agencies, health care facilities, specialty pharmacies, and independent retailers from
distribution centers and public warehouses. Outside the United States, sales are made either directly to
customers or through distributors, depending on the market served. Certain products are co-marketed
or co-promoted with other companies. AbbVie has approximately 25,000 employees and its products
are sold in over 170 countries. AbbVie operates in one business segment—pharmaceutical products.
Financial Results
In its first full year as an independent company, AbbVie achieved its key objectives, including strong
sales growth of HUMIRA and other key products, operational efficiencies and progress in advancing its
pipeline, particularly with its late-stage hepatitis C virus (HCV) program. Worldwide net sales in 2013
totaled $18.8 billion, an increase of 2 percent, despite the loss of exclusivity in the company’s lipid
franchise during the year. Generic competition began in November 2012 for TriCor, July 2013 for
TRILIPIX and September 2013 for Niaspan, resulting in the loss of $1.1 billion of revenue in 2013 over
the prior year. The company’s financial performance also included delivering fully diluted earnings per
share of $2.56, while accelerating its investment in research and development and increasing sales and
marketing support for new and existing products. In 2013, the company generated cash flows from
operations of $6.3 billion. These strong cash flows enabled the company to enhance its pipeline through
licensing and collaboration activities and to pay cash dividends to shareholders of $2.6 billion in 2013.
In 2014, AbbVie plans to continue to invest in key products, advance its pipeline and prepare for
anticipated product launches that are expected to drive growth in 2015 and beyond.
Strategic Objectives
AbbVie’s long-term strategy is to maximize its existing portfolio of products through new indications,
share gains, increased geographic expansion in underserved markets while also advancing its new
product pipeline to meet unmet medical needs. To successfully execute its long-term strategy, AbbVie
will focus on expanding HUMIRA sales, advancing the pipeline, expanding its presence in emerging
markets and managing its product portfolio to maximize value.
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