AbbVie 2013 Annual Report Download - page 47

Selling, general and administrative (SG&A) expenses in 2013 and 2012 included $228 million and
$213 million, respectively, of costs associated with the separation of AbbVie from Abbott. SG&A
expenses in 2013 included restructuring charges aggregating $39 million which principally related to the
restructuring of certain commercial operations in conjunction with the loss and expected loss of
exclusivity of certain products. SG&A expenses in 2012 and 2011 included litigation charges of
$100 million and $1.5 billion, respectively, related to the Depakote investigation. Refer to Note 13 for
information on the Depakote charge.
Excluding these items from all years, SG&A expenses increased 9 percent and 7 percent in 2013 and
2012, respectively. The increases in SG&A expenses over the three-year period were due primarily to
increased selling and marketing support for new and existing products, including continued spending for
HUMIRA, and in 2013, the full year incremental costs of becoming an independent company.
Research and Development and Acquired In-Process Research and Development
Percent
change
years ended December 31 (in millions) 2013 2012 2011 2013 2012
Research and development $2,855 $2,778 $2,618 3% 6%
as a % of net sales 15% 15% 15%
Acquired in-process research and development $ 338 $ 288 $ 673 17% (57)%
R&D expense in 2013 reflects added funding to support the company’s emerging mid- and late-stage
pipeline assets and the continued pursuit of additional HUMIRA indications. R&D expense in 2013
and 2012 reflected continued pipeline spending on programs in biologics, neuroscience and virology as
well as a $50 million R&D milestone payment related to a product in development for the treatment of
CKD in 2012. R&D expenses also included restructuring charges of $15 million in 2013, $183 million in
2012 and $72 million in 2011. Excluding restructuring charges and milestone payments, R&D expenses
increased 11 percent in 2013 and less than 1 percent in 2012.
Acquired in-process research and development (IPR&D) expense in 2013 principally included a charge
of $175 million as a result of entering into a global license agreement with Ablynx NV to develop and
commercialize ALX-0061, a charge of $70 million as a result of entering into a global collaboration
with Alvine Pharmaceuticals, Inc. to develop ALV003, a charge of $45 million as a result of entering
into a global collaboration with Galapagos NV for cystic fibrosis therapies and charges totaling
$48 million as a result of entering into several other arrangements.
IPR&D expense in 2012 included a charge of $110 million for the acquisition of ABT-719, a charge of
$150 million as a result of entering into a global collaboration to develop and commercialize an oral,
next-generation JAK1 inhibitor, and a charge of $28 million as a result of entering into a two-year
collaboration agreement to research, develop and commercialize up to three compounds with
Antibody-Drug Conjugate approaches.
IPR&D expense in 2011 included a charge of $188 million for the achievement of a developmental
milestone under a licensing agreement for bardoxolone methyl, and charges of $400 million and
$85 million for entering into collaboration agreements for second-generation oral antioxidant
inflammation modulators and an anti-CD4 biologic for the treatment of rheumatoid arthritis and
psoriasis, respectively.
Interest Expense
Interest expense (income), net in 2013 was $278 million and was comprised primarily of interest
expense on outstanding debt, partially offset by interest income of $21 million. In November 2012,
AbbVie issued $14.7 billion of long-term debt with maturities ranging from three to 30 years and
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