AbbVie Inc.
02/20/2026 | Press release | Distributed by Public on 02/20/2026 13:39
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
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). This commentary should be read in conjunction with the Consolidated Financial Statements and accompanying notes appearing in Item 8, "Financial Statements and Supplementary Data." This section of Form 10-K generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024. Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024.
EXECUTIVE OVERVIEW
Company Overview
AbbVie is a global, diversified research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, neuroscience, oncology and aesthetics. AbbVie uses its expertise, dedicated people and unique approach to innovation to develop and market advanced therapies that address some of the world's most complex and serious diseases.
On February 13, 2025, the board of directors of AbbVie unanimously elected Chief Executive Officer (CEO) Robert A. Michael to succeed Richard A. Gonzalez as Chairman of the board of directors, effective July 1, 2025, at which time Mr. Gonzalez retired from the board.
AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies and independent retailers from AbbVie-owned distribution centers and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. Outside the United States, AbbVie sells products primarily to wholesalers or through distributors, and depending on the market, works through largely centralized national payers systems to agree on reimbursement terms. Certain products are co-marketed or co-promoted with other companies. AbbVie operates as a single global business segment.
2026 Strategic Objectives
AbbVie's mission is to discover and develop innovative medicines and products that solve serious health issues today and address the medical challenges of tomorrow while achieving top-tier financial performance through outstanding execution. AbbVie intends to execute its strategy and advance its mission in a number of ways, including: (i) maximizing the benefits of a diversified revenue base with multiple long-term growth drivers; (ii) leveraging AbbVie's commercial strength and international infrastructure across therapeutic areas, ensuring strong commercial execution of new product launches as well as continued investment in key on-market products; (iii) continuing to invest in and expand its pipeline in support of opportunities across our core areas of immunology, neuroscience, oncology and aesthetics as well as new sources of growth such as obesity; (iv) generating substantial operating cash flows to support investments in innovative research and development and returning cash to shareholders via a strong and growing dividend while maintaining a strong investment grade credit rating. In addition, AbbVie anticipates several regulatory submissions, approvals and data readouts from key clinical trials in the next 12 months.
AbbVie expects to achieve its strategic objectives through:
•Maximizing revenue growth of our key on-market products, including Skyrizi, Rinvoq, Vraylar, Botox Therapeutic, Ubrelvy, Qulipta, Vyalev, Venclexta, Elahere, Botox Cosmetic and Juvederm Collection.
•Advancing our research and development pipeline by delivering late-stage pipeline milestones, achieving key proof-of-concept objectives across therapeutic areas and continuing to invest in key on-market product indication expansion.
•Maximizing the value of key acquisitions as well as continuing to invest in external innovation.
•The favorable impact of pipeline products and indications recently approved or currently under regulatory review where approval is expected in 2026. These products are described in greater detail in the section labeled "Research and Development" included as part of this Item 7.
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2025 Form 10-K|
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2025 Financial Results
AbbVie's strategy has focused on delivering strong financial results, maximizing the benefits of a diversified revenue base, advancing and investing in its pipeline and returning value to shareholders while ensuring a strong, sustainable growth business over the long term. The company's financial performance in 2025 included delivering worldwide net revenues of $61.2 billion, operating earnings of $15.1 billion, diluted earnings per share of $2.36 and cash flows from operations of $19.0 billion. Worldwide net revenues increased by 9% on a reported and on a constant currency basis.
Financial results for 2025 also included the following costs: (i) $7.4 billion related to the amortization of intangible assets; (ii) $6.5 billion for the change in fair value of contingent consideration liabilities; (iii) $847 million related to intangible asset impairment; and (iv) $276 million of acquisition and integration expenses. Additionally, financial results reflected continued funding to support all stages of AbbVie's pipeline assets and continued investment in AbbVie's on-market brands.
Recent Events
Regulatory Environment
Subsequent to December 31, 2025, AbbVie announced a voluntary agreement with the U.S. government to further advance access and affordability of AbbVie's products in the U.S. while protecting and investing in U.S. pharmaceutical innovation. AbbVie will provide low prices in Medicaid and expand affordable, direct-to-patient offerings. Additionally, AbbVie pledged $100 billion in U.S.-based research and development and capital investments, including manufacturing, over the next decade. Under this voluntary agreement, the U.S. government has agreed to provide AbbVie a three-year exemption from tariffs and future price mandates.
On July 4, 2025, the United States government signed into law the One Big Beautiful Bill Act of 2025 (2025 Act). Included within the 2025 Act are provisions that permanently extend certain expiring provisions of the 2017 Tax Cuts and Jobs Act, modify the international tax framework to reduce the tax rate on certain foreign earned income, restore the tax treatment of expensing for domestic research and development costs and bonus depreciation, and allow for full expensing of qualified production property. In addition, the legislation contains multiple effective dates and transition elections, with certain provisions effective in 2025 and others implemented through 2027. The 2025 Act also includes certain new health care provisions related to the orphan drug exclusion of the Inflation Reduction Act of 2022, and Medicaid, which have various effective dates. The new legislation had a favorable impact on cash tax payments in the current year.
The Inflation Reduction Act of 2022 has and will continue to have a significant impact on how drugs are covered and paid for under the Medicare program, including through the creation of financial penalties for drugs whose price increases outpace inflation, the redesign of Medicare Part D benefits to shift a greater portion of the costs to manufacturers, and through government price-setting for certain Medicare Part B and Part D drugs. In 2023, the U.S. Department of Health and Human Services, through Centers for Medicare and Medicaid Service, selected Imbruvica as one of 10 medicines subject to government-set prices in Medicare Part D beginning in 2026 and in 2025, selected Vraylar and Linzess as two of 15 medicines subject to government-set prices in Medicare Part D beginning in 2027. In January 2026, Botox was selected as one of 15 medicines subject to government-set prices in Medicare Parts B and D beginning in 2028. It is possible that more of our products, including products that generate substantial revenues, could be selected in future years, which could, among other things, accelerate revenue erosion prior to expiration of intellectual property protections. See Part I, Item 1 "Business - Regulation - Commercialization, Distribution and Manufacturing," Part I, Item 1A "Risk Factors" and Note 7 to the Consolidated Financial Statements for additional information.
U.S. Capital Investment
In 2025, AbbVie announced the start of construction of a new active pharmaceutical ingredient facility in Illinois and an expansion of biologics manufacturing and research and development capacity in Massachusetts. In January 2026, AbbVie announced that it entered into an agreement to acquire a device manufacturing facility in Arizona. These projects are part of AbbVie's plan to increase capital investment in the U.S. to broadly support innovation and expand critical manufacturing capabilities and capacity.
Intellectual Property Protection and Regulatory Exclusivity
In September 2025, AbbVie announced the settlement of litigation with all generic manufacturers that filed abbreviated new drug applications with the U.S. Food and Drug Administration (FDA) for generic versions of upadacitinib tablets, which AbbVie markets as Rinvoq. Given the settlement and license agreements, which are subject to standard acceleration provisions, assuming pediatric exclusivity is granted, no generic entry for any Rinvoq tablets is expected prior to April 2037 in the United States.
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| 2025 Form 10-K
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Research and Development
Research and innovation are the cornerstones of AbbVie's business as a global biopharmaceutical company. AbbVie's long-term success depends to a great extent on its ability to continue to discover and develop innovative products and acquire or collaborate on compounds currently in development by other biotechnology or pharmaceutical companies.
AbbVie's pipeline currently includes approximately 90 compounds, devices or indications in development individually or under collaboration or license agreements. Of these programs, approximately 60 are in mid- and late-stage development. The company's pipeline is focused on such important therapeutic areas as immunology, neuroscience, oncology and aesthetics and other specialties, including obesity.
The following sections summarize transitions of significant programs from mid-stage development to late-stage development as well as developments in significant late-stage and registrational programs. AbbVie expects multiple mid-stage programs to transition into late-stage programs in the next 12 months.
Significant Programs and Developments
Immunology
Rinvoq
•In April 2025, AbbVie announced that the European Commission (EC) granted marketing authorization to Rinvoq for the treatment of giant cell arteritis (GCA) in adult patients.
•In April 2025, AbbVie announced that the U.S. FDA approved Rinvoq for the treatment of GCA in adult patients.
•In July 2025, AbbVie announced positive topline results from Study 2 of its Phase 3 UP-AA trial for Rinvoq as a monotherapy in adults and adolescents with severe alopecia areata (AA).
•In August 2025, AbbVie announced positive topline results from Study 1 of its Phase 3 UP-AA trial for Rinvoq as a monotherapy in adult and adolescent patients with severe AA.
•In October 2025, AbbVie announced that the U.S. FDA approved a supplemental New Drug Application (sNDA) that updates the indication statement for Rinvoq for the treatment of adults with moderately to severely active ulcerative colitis and moderately to severely active Crohn's disease. The updated indication allows the use of Rinvoq prior to the use of tumor necrosis factor (TNF) blocking agents in patients for whom use of these treatments is clinically inadvisable and who have received at least one approved systemic therapy.
•In October 2025, AbbVie announced positive topline results from the Phase 3b/4 head-to-head SELECT-SWITCH study evaluating the efficacy and safety of Rinvoq compared to Humira in adult patients with moderate to severe rheumatoid arthritis (RA), who had an inadequate response or intolerance to a single TNF inhibitor other than Humira. In the study, Rinvoq demonstrated superiority versus Humira in achieving low disease activity and remission.
•In October 2025, AbbVie announced positive topline results from two replicate Phase 3 studies evaluating the efficacy and safety of Rinvoq in adult and adolescent patients with non-segmental vitiligo.
•In November 2025, AbbVie submitted a marketing authorization application (MAA) to the European Medicines Agency (EMA) for Rinvoq for the treatment of adults and adolescents 12 years and older with severe AA.
•In February 2026, AbbVie announced the submission of applications for a new indication to the U.S. FDA and EMA for Rinvoq for the treatment of adult and adolescent patients with non-segmental vitiligo.
Neuroscience
Qulipta
•In February 2025, AbbVie initiated a Phase 3 clinical trial to evaluate Qulipta for the preventive treatment of menstrual migraine.
•In June 2025, AbbVie announced positive topline results from its Phase 3 TEMPLE head-to-head study evaluating the tolerability, safety and efficacy of Qulipta compared to the highest tolerated dose of topiramate in adult patients with a history of four or more migraine days per month.
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2025 Form 10-K|
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•In December 2025, AbbVie announced results from the Phase 3 ECLIPSE study, evaluating the safety, efficacy and tolerability of Aquipta versus placebo for the acute treatment of migraine in adults. The study met its primary and key secondary endpoints, with Aquipta demonstrating superiority for achieving pain freedom at two hours after treatment of the first migraine attack.
•In December 2025, AbbVie announced the submission of an application for a new indication to the EMA for Aquipta for the acute treatment of adult patients with migraine.
Tavapadon
•In September 2025, AbbVie announced the submission of a New Drug Application (NDA) to the U.S. FDA for tavapadon, a novel selective dopamine D1/D5 receptor partial agonist, for the treatment of Parkinson's disease.
Oncology
Emrelis
•In May 2025, AbbVie announced that the U.S. FDA granted accelerated approval for Emrelis (telisotuzumab vedotin-tllv) for the treatment of adult patients with locally advanced or metastatic, non-squamous non-small cell lung cancer with high c-Met protein overexpression who have received a prior systemic therapy.
Venclexta
•In June 2025, AbbVie announced that the global Phase 3 VERONA trial evaluating Venclexta in combination with azacitidine in the treatment of newly diagnosed higher-risk myelodysplastic syndrome did not meet the primary endpoint of overall survival. No new safety signals were observed.
•In July 2025, AbbVie announced the submission of a sNDA to the U.S. FDA for the fixed-duration, all oral combination regimen of Venclexta and acalabrutinib in previously untreated patients with chronic lymphocytic leukemia (CLL). The submission is supported by positive results from the Phase 3 AMPLIFY trial which demonstrated that the combination regimen improved progression-free survival compared to standard chemoimmunotherapy in previously untreated patients with CLL.
Epkinly
•In May 2025, Genmab A/S (Genmab) announced positive topline results from the Phase 3 trial evaluating Epkinly plus rituximab and lenalidomide versus rituximab and lenalidomide alone in adult patients with relapsed or refractory (R/R) follicular lymphoma.
•In November 2025, AbbVie announced that the U.S. FDA approved Epkinly plus rituximab and lenalidomide for the treatment of adult patients with R/R follicular lymphoma.
•In January 2026, AbbVie announced topline results from the Phase 3 trial evaluating Epkinly compared to investigator's choice of chemoimmunotherapy in adult patients with R/R diffuse large B-cell lymphoma (DLBCL). The study demonstrated an improvement in progression free survival (PFS) but did not demonstrate a statistically significant improvement in overall survival (OS).
PVEK
•In September 2025, AbbVie announced the submission of a BLA to the U.S. FDA for approval of pivekimab sunirine (PVEK), an investigational antibody-drug conjugate (ADC), for treatment of blastic plasmacytoid dendritic cell neoplasm (BPDCN).
Aesthetics
TrenibotE
•In April 2025, AbbVie announced the submission of a BLA to the U.S. FDA for approval of trenibotulinumtoxinE (TrenibotE) for the treatment of moderate to severe glabellar lines. TrenibotE is a first-in-class botulinum neurotoxin serotype E characterized by a rapid onset of action as early as 8 hours after administration and short duration of effect of 2-3 weeks. If approved, TrenibotE will be the first neurotoxin of its kind available to patients.
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| 2025 Form 10-K
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Juvederm Collection
•In June 2025, AbbVie announced that the U.S. FDA accepted for review the supplemental premarket approval application for Skinvive by Juvederm to reduce neck lines for the improvement of neck appearance.
Other
Emblaveo
•In February 2025, AbbVie announced that the U.S. FDA approved Emblaveo (aztreonam and avibactam), as the first fixed-dose, intravenous, monobactam/β-lactamase inhibitor combination antibiotic to treat complicated intra-abdominal infections, including those caused by Gram-negative bacteria.
Mavyret
•In June 2025, AbbVie announced that the U.S. FDA approved a label expansion for Mavyret, an oral pangenotypic direct acting antiviral therapy. It is now approved for the treatment of adults and pediatric patients three years and older with acute or chronic hepatitis C virus infection.
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2025 Form 10-K|
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RESULTS OF OPERATIONS
Net Revenues
The comparisons presented at constant currency rates reflect comparative local currency net revenues at the prior year's foreign exchange rates. This measure provides information on the change in net revenues assuming that foreign currency exchange rates had not changed between the prior and current periods. AbbVie believes that the non-GAAP measure of change in net revenues at constant currency rates, when used in conjunction with the GAAP measure of change in net revenues at actual currency rates, may provide a more complete understanding of the company's operations and can facilitate analysis of the company's results of operations, particularly in evaluating performance from one period to another.
| Percent change | |||||||||||||||||||||||||||||||||||||||||
| At actual currency rates | At constant currency rates | ||||||||||||||||||||||||||||||||||||||||
| years ended (dollars in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||
| United States | $ | 46,603 | $ | 43,029 | $ | 41,883 | 8.3 | % | 2.7 | % | 8.3 | % | 2.7 | % | |||||||||||||||||||||||||||
| International | 14,557 | 13,305 | 12,435 | 9.4 | % | 7.0 | % | 9.2 | % | 11.1 | % | ||||||||||||||||||||||||||||||
| Net revenues | $ | 61,160 | $ | 56,334 | $ | 54,318 | 8.6 | % | 3.7 | % | 8.5 | % | 4.6 | % | |||||||||||||||||||||||||||
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| 2025 Form 10-K
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The following table details AbbVie's worldwide net revenues:
| Percent change | |||||||||||||||||||||||||||||||||||||||||||||||
| At actual currency rates | At constant currency rates | ||||||||||||||||||||||||||||||||||||||||||||||
| years ended December 31 (dollars in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||||||||||||||||||||||
| Immunology | |||||||||||||||||||||||||||||||||||||||||||||||
| Skyrizi | United States | $ | 15,202 | $ | 10,086 | $ | 6,753 | 50.7 | % | 49.3 | % | 50.7 | % | 49.3 | % | ||||||||||||||||||||||||||||||||
| International | 2,360 | 1,632 | 1,010 | 44.6 | % | 61.6 | % | 43.0 | % | 65.4 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 17,562 | $ | 11,718 | $ | 7,763 | 49.9 | % | 50.9 | % | 49.7 | % | 51.4 | % | |||||||||||||||||||||||||||||||||
| Rinvoq | United States | $ | 5,940 | $ | 4,259 | $ | 2,824 | 39.5 | % | 50.8 | % | 39.5 | % | 50.8 | % | ||||||||||||||||||||||||||||||||
| International | 2,364 | 1,712 | 1,145 | 38.0 | % | 49.6 | % | 37.1 | % | 57.0 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 8,304 | $ | 5,971 | $ | 3,969 | 39.1 | % | 50.4 | % | 38.8 | % | 52.5 | % | |||||||||||||||||||||||||||||||||
| Humira | United States | $ | 3,062 | $ | 7,142 | $ | 12,160 | (57.1) | % | (41.3) | % | (57.1) | % | (41.3) | % | ||||||||||||||||||||||||||||||||
| International | 1,478 | 1,851 | 2,244 | (20.2) | % | (17.5) | % | (19.5) | % | (13.2) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 4,540 | $ | 8,993 | $ | 14,404 | (49.5) | % | (37.6) | % | (49.4) | % | (36.9) | % | |||||||||||||||||||||||||||||||||
| Neuroscience | |||||||||||||||||||||||||||||||||||||||||||||||
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Vraylar
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United States | $ | 3,612 | $ | 3,260 | $ | 2,755 | 10.8 | % | 18.4 | % | 10.8 | % | 18.4 | % | ||||||||||||||||||||||||||||||||
| International | 9 | 7 | 4 | 33.3 | % | 57.8 | % | 36.8 | % | 58.6 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 3,621 | $ | 3,267 | $ | 2,759 | 10.8 | % | 18.4 | % | 10.8 | % | 18.4 | % | |||||||||||||||||||||||||||||||||
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Botox Therapeutic
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United States | $ | 3,151 | $ | 2,718 | $ | 2,476 | 16.0 | % | 9.8 | % | 16.0 | % | 9.8 | % | ||||||||||||||||||||||||||||||||
| International | 618 | 565 | 515 | 9.3 | % | 9.8 | % | 9.9 | % | 14.0 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 3,769 | $ | 3,283 | $ | 2,991 | 14.8 | % | 9.8 | % | 14.9 | % | 10.5 | % | |||||||||||||||||||||||||||||||||
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Ubrelvy
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United States | $ | 1,239 | $ | 981 | $ | 803 | 26.3 | % | 22.1 | % | 26.3 | % | 22.1 | % | ||||||||||||||||||||||||||||||||
| International | 32 | 25 | 12 | 28.6 | % | >100.0 % | 30.7 | % | >100.0 % | ||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,271 | $ | 1,006 | $ | 815 | 26.4 | % | 23.4 | % | 26.5 | % | 23.4 | % | |||||||||||||||||||||||||||||||||
| Qulipta | United States | $ | 906 | $ | 628 | $ | 405 | 44.1 | % | 55.3 | % | 44.1 | % | 55.3 | % | ||||||||||||||||||||||||||||||||
| International | 130 | 30 | 3 | >100.0 % | >100.0 % | >100.0 % | >100.0 % | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | 1,036 | $ | 658 | $ | 408 | 57.3 | % | 61.3 | % | 56.8 | % | 61.3 | % | |||||||||||||||||||||||||||||||||
| Vyalev | United States | $ | 167 | $ | 1 | $ | - | >100.0 % | n/m | >100.0 % | n/m | ||||||||||||||||||||||||||||||||||||
| International | 315 | 98 | 3 | >100.0 % | >100% | >100.0 % | >100% | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | 482 | $ | 99 | $ | 3 | >100.0 % | >100% | >100.0 % | >100% | |||||||||||||||||||||||||||||||||||||
| Duodopa | United States | $ | 73 | $ | 96 | $ | 97 | (23.7) | % | (1.8) | % | (23.7) | % | (1.8) | % | ||||||||||||||||||||||||||||||||
| International | 308 | 351 | 371 | (12.3) | % | (5.3) | % | (14.1) | % | (5.4) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 381 | $ | 447 | $ | 468 | (14.8) | % | (4.6) | % | (16.2) | % | (4.7) | % | |||||||||||||||||||||||||||||||||
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Other Neuroscience
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United States | $ | 192 | $ | 223 | $ | 254 | (13.9) | % | (12.1) | % | (13.9) | % | (12.1) | % | ||||||||||||||||||||||||||||||||
| International | 15 | 16 | 19 | (0.4) | % | (18.9) | % | 2.8 | % | (18.3) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 207 | $ | 239 | $ | 273 | (13.0) | % | (12.5) | % | (12.8) | % | (12.5) | % | |||||||||||||||||||||||||||||||||
| Oncology | |||||||||||||||||||||||||||||||||||||||||||||||
| Imbruvica | United States | $ | 2,048 | $ | 2,448 | $ | 2,665 | (16.4) | % | (8.1) | % | (16.4) | % | (8.1) | % | ||||||||||||||||||||||||||||||||
| Collaboration revenues | 821 | 899 | 931 | (8.6) | % | (3.5) | % | (8.6) | % | (3.5) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 2,869 | $ | 3,347 | $ | 3,596 | (14.3) | % | (6.9) | % | (14.3) | % | (6.9) | % | |||||||||||||||||||||||||||||||||
| Venclexta | United States | $ | 1,306 | $ | 1,234 | $ | 1,087 | 5.9 | % | 13.5 | % | 5.9 | % | 13.5 | % | ||||||||||||||||||||||||||||||||
| International | 1,486 | 1,349 | 1,201 | 10.2 | % | 12.3 | % | 9.8 | % | 18.0 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 2,792 | $ | 2,583 | $ | 2,288 | 8.1 | % | 12.9 | % | 7.9 | % | 15.9 | % | |||||||||||||||||||||||||||||||||
| Elahere | United States | $ | 607 | $ | 477 | $ | - | 27.2 | % | n/m | 27.2 | % | n/m | ||||||||||||||||||||||||||||||||||
| International | 83 | 2 | - | >100.0 % | n/m | >100.0 % | n/m | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | 690 | $ | 479 | $ | - | 44.0 | % | n/m | 43.4 | % | n/m | |||||||||||||||||||||||||||||||||||
| Epkinly | Collaboration revenues | $ | 181 | $ | 118 | $ | 28 | 52.9 | % | >100.0 % | 52.9 | % | >100.0 % | ||||||||||||||||||||||||||||||||||
| International | 90 | 28 | 3 | >100.0 % | >100.0 % | >100.0 % | >100.0 % | ||||||||||||||||||||||||||||||||||||||||
| Total | $ | 271 | $ | 146 | $ | 31 | 85.5 | % | >100.0 % | 85.0 | % | >100.0 % | |||||||||||||||||||||||||||||||||||
| Other Oncology | United States | $ | 33 | $ | - | $ | - | n/m | n/m | n/m | n/m | ||||||||||||||||||||||||||||||||||||
| Aesthetics | |||||||||||||||||||||||||||||||||||||||||||||||
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Botox Cosmetic
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United States | $ | 1,504 | $ | 1,682 | $ | 1,670 | (10.5) | % | 0.7 | % | (10.5) | % | 0.7 | % | ||||||||||||||||||||||||||||||||
| International | 1,098 | 1,038 | 1,012 | 5.7 | % | 2.7 | % | 6.2 | % | 6.7 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 2,602 | $ | 2,720 | $ | 2,682 | (4.3) | % | 1.4 | % | (4.1) | % | 2.9 | % | |||||||||||||||||||||||||||||||||
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Juvederm Collection
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United States | $ | 385 | $ | 469 | $ | 519 | (18.0) | % | (9.6) | % | (18.0) | % | (9.6) | % | ||||||||||||||||||||||||||||||||
| International | 608 | 708 | 859 | (14.1) | % | (17.6) | % | (13.6) | % | (13.4) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 993 | $ | 1,177 | $ | 1,378 | (15.6) | % | (14.6) | % | (15.3) | % | (12.0) | % | |||||||||||||||||||||||||||||||||
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2025 Form 10-K|
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Other Aesthetics
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United States | $ | 1,101 | $ | 1,118 | $ | 1,060 | (1.5) | % | 5.5 | % | (1.5) | % | 5.5 | % | ||||||||||||||||||||||||||||||||
| International | 164 | 161 | 174 | 1.8 | % | (7.1) | % | 2.7 | % | (1.0) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 1,265 | $ | 1,279 | $ | 1,234 | (1.1) | % | 3.7 | % | (1.0) | % | 4.6 | % | |||||||||||||||||||||||||||||||||
| Eye Care | |||||||||||||||||||||||||||||||||||||||||||||||
| Ozurdex | United States | $ | 124 | $ | 138 | $ | 143 | (10.1) | % | (4.1) | % | (10.1) | % | (4.1) | % | ||||||||||||||||||||||||||||||||
| International | 369 | 356 | 329 | 3.7 | % | 8.3 | % | 3.0 | % | 10.7 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 493 | $ | 494 | $ | 472 | (0.2) | % | 4.5 | % | (0.7) | % | 6.2 | % | |||||||||||||||||||||||||||||||||
|
Lumigan/Ganfort
|
United States | $ | 189 | $ | 187 | $ | 173 | 1.2 | % | 7.5 | % | 1.2 | % | 7.5 | % | ||||||||||||||||||||||||||||||||
| International | 221 | 242 | 259 | (8.7) | % | (6.4) | % | (8.3) | % | (3.9) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 410 | $ | 429 | $ | 432 | (4.4) | % | (0.9) | % | (4.2) | % | 0.6 | % | |||||||||||||||||||||||||||||||||
|
Alphagan/Combigan
|
United States | $ | 53 | $ | 95 | $ | 121 | (43.3) | % | (21.8) | % | (43.3) | % | (21.8) | % | ||||||||||||||||||||||||||||||||
| International | 144 | 153 | 151 | (6.3) | % | 1.5 | % | (4.6) | % | 7.6 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 197 | $ | 248 | $ | 272 | (20.4) | % | (8.8) | % | (19.4) | % | (5.4) | % | |||||||||||||||||||||||||||||||||
|
Other Eye Care
|
United States | $ | 588 | $ | 644 | $ | 815 | (8.7) | % | (21.1) | % | (8.7) | % | (21.1) | % | ||||||||||||||||||||||||||||||||
| International | 421 | 427 | 424 | (1.4) | % | 0.9 | % | 0.5 | % | 5.6 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 1,009 | $ | 1,071 | $ | 1,239 | (5.8) | % | (13.6) | % | (5.0) | % | (12.0) | % | |||||||||||||||||||||||||||||||||
| Other Key Products | |||||||||||||||||||||||||||||||||||||||||||||||
| Mavyret | United States | $ | 635 | $ | 595 | $ | 659 | 6.7 | % | (9.7) | % | 6.7 | % | (9.7) | % | ||||||||||||||||||||||||||||||||
| International | 682 | 716 | 771 | (4.7) | % | (7.2) | % | (5.7) | % | (4.5) | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 1,317 | $ | 1,311 | $ | 1,430 | 0.4 | % | (8.3) | % | (0.2) | % | (6.9) | % | |||||||||||||||||||||||||||||||||
| Creon | United States | $ | 1,512 | $ | 1,383 | $ | 1,268 | 9.3 | % | 9.1 | % | 9.3 | % | 9.1 | % | ||||||||||||||||||||||||||||||||
|
Linzess/Constella
|
United States | $ | 864 | $ | 916 | $ | 1,073 | (5.7) | % | (14.6) | % | (5.7) | % | (14.6) | % | ||||||||||||||||||||||||||||||||
| International | 43 | 38 | 35 | 13.6 | % | 7.5 | % | 13.3 | % | 7.2 | % | ||||||||||||||||||||||||||||||||||||
| Total | $ | 907 | $ | 954 | $ | 1,108 | (4.9) | % | (13.9) | % | (4.9) | % | (13.9) | % | |||||||||||||||||||||||||||||||||
| All other | $ | 2,627 | $ | 3,032 | $ | 3,035 | (13.3) | % | - | % | (12.8) | % | 1.4 | % | |||||||||||||||||||||||||||||||||
| Total net revenues | $ | 61,160 | $ | 56,334 | $ | 54,318 | 8.6 | % | 3.7 | % | 8.5 | % | 4.6 | % | |||||||||||||||||||||||||||||||||
n/m - Not meaningful
The following discussion and analysis of AbbVie's net revenues by product is presented on a constant currency basis.
Net revenues for Skyrizi increased 50% in 2025 primarily driven by continued strong market share uptake as well as market growth across all indications.
Net revenues for Rinvoq increased 39% in 2025 primarily driven by continued strong market share uptake as well as market growth across all indications.
Net revenues for Humira decreased 49% in 2025 primarily driven by continued impact of direct biosimilar competition following the loss of exclusivity.
Net revenues for Vraylar increased 11% in 2025 primarily driven by continued market share uptake as well as market growth.
Net revenues for Botox Therapeutic increased 15% in 2025 primarily driven by market growth as well as continued market share uptake.
Net revenues for Ubrelvy increased 27% in 2025 primarily driven by continued market share uptake as well as market growth.
Net revenues for Qulipta increased 57% in 2025 primarily driven by continued strong market share uptake as well as market growth.
Net revenues for Imbruvica represent product revenues in the United States and collaboration revenues outside of the United States related to AbbVie's 50% share of Imbruvica profit. AbbVie's global Imbruvica revenues decreased 14% in 2025 primarily driven by decreased demand and unfavorable pricing in the United States as well as decreased collaboration revenues.
Net revenues for Venclexta increased 8% in 2025 primarily driven by increased demand, partially offset by unfavorable pricing.
Net revenues for Elahere increased 43% in 2025 primarily drive by increased demand and the favorable impact of a full period of Elahere results in 2025 compared to the prior year.
|
| 2025 Form 10-K
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Net revenues for Botox Cosmetic decreased 4% in 2025. In the United States, Botox Cosmetic net revenues decreased 11% primarily driven by unfavorable pricing due to customer loyalty program changes, lower market share and decreased consumer demand, partially offset by the timing of customer inventory destocking in the prior year. Internationally, Botox Cosmetic net revenues increased 6% primarily driven by increased consumer demand across certain international markets, partially offset by unfavorable pricing.
Net revenues for Juvederm Collection decreased 15% in 2025 primarily driven by decreased consumer demand, partially offset by the timing of customer inventory destocking in the prior year.
Gross Margin
| Percent change | |||||||||||||||||||||||||||||
| years ended December 31 (dollars in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | ||||||||||||||||||||||||
| Gross margin | $ | 42,956 | $ | 39,430 | $ | 33,903 | 9 | % | 16 | % | |||||||||||||||||||
| as a % of net revenues | 70 | % | 70 | % | 62 | % | |||||||||||||||||||||||
Gross margin as a percentage of net revenues in 2025 was flat compared to 2024. Gross margin percentage for 2025 was favorably impacted by increased leverage from net revenues growth, lower amortization of intangible assets and lower acquisition and integration costs offset by the unfavorable impact of intangible asset impairment charges of $847 million.
Selling, General and Administrative
| Percent change | |||||||||||||||||||||||||||||
| years ended December 31 (dollars in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | ||||||||||||||||||||||||
| Selling, general and administrative | $ | 14,010 | $ | 14,752 | $ | 12,872 | (5) | % | 15 | % | |||||||||||||||||||
| as a % of net revenues | 23 | % | 26 | % | 24 | % | |||||||||||||||||||||||
Selling, general and administrative (SG&A) expenses as a percentage of net revenues decreased in 2025 compared to 2024. SG&A expense percentage for 2025 was favorably impacted by net leverage from revenue growth, lower litigation reserve charges and lower acquisition and integration costs.
Research and Development
| Percent change | |||||||||||||||||||||||||||||
| years ended December 31 (dollars in millions) | 2025 | 2024 | 2023 | 2025 | 2024 | ||||||||||||||||||||||||
| Research and development | $ | 9,096 | $ | 12,791 | $ | 7,675 | (29) | % | 67 | % | |||||||||||||||||||
| as a % of net revenues | 15 | % | 23 | % | 14 | % | |||||||||||||||||||||||
Research and development (R&D) expenses as a percentage of net revenues decreased in 2025 compared to 2024. R&D expense percentage for 2025 was favorably impacted by lower intangible asset impairment charges. Intangible asset impairment charges were $4.5 billion in 2024. R&D expenses other than intangible asset impairment charges increased to support all stages of the company's pipeline assets.
Acquired IPR&D and Milestones
| years ended December 31 (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Upfront charges | $ | 4,808 | $ | 2,627 | $ | 582 | |||||||||||
| Development milestones | 208 | 130 | 196 | ||||||||||||||
| Acquired IPR&D and milestones | $ | 5,016 | $ | 2,757 | $ | 778 | |||||||||||
Acquired IPR&D and milestones expense in 2025 included upfront charges of $1.9 billion related to the acquisition of Capstan Therapeutics, Inc., $906 million related to the acquisition of Gilgamesh Pharmaceuticals, Inc., $700 million related to a license agreement with Ichnos Glenmark Innovation, Inc., $350 million related to a license agreement with Gubra A/S and $335 million related to an option-to-license agreement with ADARx Pharmaceuticals, Inc. Acquired IPR&D and milestones in 2024 included upfront charges of $1.4 billion related to the acquisition of Aliada Therapeutics Holdings, Inc. and $250 million related to the acquisition of Celsius Therapeutics, Inc. See Note 5 to the Consolidated Financial Statements for additional information.
|
2025 Form 10-K|
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Other Operating Income
Other operating income included a gain of $217 million in 2025 related to the termination of an R&D collaboration agreement with Calico Life Sciences LLC.
Other Non-Operating Expenses
| years ended December 31 (in millions) | 2025 | 2024 | 2023 | |||||||||||||||||
| Interest expense | $ | 2,893 | $ | 2,808 | $ | 2,224 | ||||||||||||||
| Interest income | (266) | (648) | (540) | |||||||||||||||||
| Interest expense, net | $ | 2,627 | $ | 2,160 | $ | 1,684 | ||||||||||||||
| Net foreign exchange loss | $ | 58 | $ | 21 | $ | 146 | ||||||||||||||
| Other expense, net | 5,793 | 3,240 | 4,677 | |||||||||||||||||
Interest expense in 2025 increased compared to 2024 primarily due to the impact of higher effective interest rates.
Interest income in 2025 decreased compared to 2024 primarily due to a lower average cash and equivalents balance.
Other expense, net included charges related to changes in fair value of contingent consideration liabilities of $6.5 billion in 2025 and $3.8 billion in 2024. The fair value of contingent consideration liabilities is impacted by the passage of time and multiple other inputs, including discount rates, the estimated amount of future sales of the acquired products and other market-based factors. In 2025, the change in fair value reflected higher estimated Skyrizi sales, the passage of time, lower discount rates and a longer estimated royalty period. In 2024, the change in fair value reflected higher estimated Skyrizi sales and the passage of time, partially offset by higher discount rates.
Income Tax Expense
The effective income tax rate was 36% in 2025, (15)% in 2024 and 22% in 2023. The effective income tax rate fluctuates year to year due to the allocation of the company's taxable earnings among jurisdictions, as well as certain discrete factors and events in each year, including changes in tax law and business development activities. The effective income tax rates in 2025, 2024 and 2023 differed from the statutory tax rate principally due to the impact of foreign operations with lower income tax rates in locations outside the United States, the U.S. global minimum tax, changes in fair value of contingent consideration, tax audits and settlements, tax credits and incentives in the United States, Puerto Rico and other foreign tax jurisdictions, and business development activities. The effective income tax rate in 2025 was higher than 2024 primarily due to a one-time tax benefit associated with the closing of a three-year U.S. IRS examination in 2024, partially offset by decreases in unrecognized tax benefits, a decrease in the impact of acquisition costs related to certain business development activities and a decrease related to the impact of changes in fair value of contingent consideration.
The company's net earnings and cash flows could be affected by future tax policy and law changes in the jurisdictions in which we operate, including changes in tax law related to the projects undertaken by the Organization for Economic Cooperation and Development (OECD). These projects include a global minimum tax rate of 15%, referred to as "Pillar Two", and the creation of a new global system to tax income based on the location to which products are sold, referred to as "Pillar One." Numerous countries have agreed to a statement in support of the OECD model rules and European Union member states have agreed to implement Pillar Two. This implementation includes aspects of legislation that were effective starting in 2024.
In recent years, the OECD has issued Administrative Guidance, including the most recent side-by-side agreement released on January 5, 2026. The side-by-side agreement is intended to complement the OECD's Pillar Two model rules with the addition of two new safe harbors that are aimed to provide clarity and reduce compliance complexity for eligible multinational companies. The Administrative Guidance generally requires further legislative action to be effective. These potential changes increase tax uncertainty and may impact income tax expense in future years. AbbVie will continue to monitor pending legislation and implementation by individual countries and evaluate the potential impact on the company's business in future periods.
|
| 2025 Form 10-K
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FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
| years ended December 31 (in millions) | 2025 | 2024 | 2023 | ||||||||||||||
| Cash flows provided by (used in) | |||||||||||||||||
| Operating activities | $ | 19,030 | $ | 18,806 | $ | 22,839 | |||||||||||
| Investing activities | (6,643) | (20,820) | (2,009) | ||||||||||||||
| Financing activities | (12,724) | (5,211) | (17,222) | ||||||||||||||
Operating cash flows in 2025 increased compared to the prior year primarily due to increased results from operations driven by higher net revenues, timing of working capital and lower acquisition-related cash expenses, partially offset by higher payments related to litigation matters and higher payments of contingent consideration liabilities. Operating cash flows also reflected AbbVie's contributions to its defined benefit plans of $348 million in 2025 and $326 million in 2024.
Investing cash flows in 2025 included payments made for other acquisitions and investments, net of cash acquired of $5.2 billion and capital expenditures of $1.2 billion. Investing cash flows in 2024 included $18.5 billion cash consideration paid to acquire ImmunoGen, Inc. (ImmunoGen) and Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics) offset by cash acquired of $952 million, net sales and maturities of investment securities of $482 million, payments made for other acquisitions and investments of $3.0 billion and capital expenditures of $974 million.
Financing cash flows in 2025 included the issuance of unsecured senior notes totaling $4.0 billion aggregate principal and $2.0 billionunder the 364-day term loan credit agreement. Financing cash flows also included the repayment of $3.0 billion aggregate principal of 3.80%senior notes and $3.8 billionaggregate principal 3.60%senior notes.
Financing cash flows in 2024 included the issuance of unsecured senior notes totaling $15.0 billion aggregate principal which were used to finance the acquisitions of ImmunoGen and Cerevel Therapeutics. Additionally, financing cash flows included the issuance and repayment of $5.0 billion under the term loan credit agreement and repayments of $3.8 billion aggregate principal amount of 2.60% senior notes, €1.5 billion aggregate principal amount of 1.38% senior euro notes, €700 million aggregate principal amount of 1.25% senior euro notes, $1.0 billion aggregate principal amount of 3.85% senior notes, $99 million of secured term notes assumed from ImmunoGen in conjunction with the acquisition and settlement of $400 million aggregate amount of 2.5% convertible senior notes assumed from Cerevel Therapeutics. Additionally, the company refinanced its $2.0 billion floating rate three-year term loan. As part of the refinancing, the company repaid the existing $2.0 billion term loan due May 2025 and borrowed $2.0 billion under a new term loan due April 2027.
Financing cash flows also included cash dividend payments of $11.7 billion in 2025 and $11.0 billion in 2024. The increase in cash dividend payments was primarily driven by an increase of the dividend rate.
The company's stock repurchase authorization permits purchases of AbbVie shares from time to time in open-market or private transactions at management's discretion. The program has no time limit and can be discontinued at any time. AbbVie repurchased 3 million shares for $606 million in 2025 and 7 million shares for $1.3 billion in 2024. AbbVie's remaining stock repurchase authorization was $2.9 billion as of December 31, 2025. On February 16, 2023, AbbVie's board of directors authorized a $5.0 billion increase to the existing stock repurchase authorization.
During 2025 and 2024, the company issued and redeemed commercial paper. The balance of commercial paper borrowings outstanding was $499 million as of December 31, 2025. There were no commercial paper borrowings outstanding as of December 31, 2024. AbbVie may issue additional commercial paper or retire commercial paper to meet liquidity requirements as needed.
Credit Risk
AbbVie monitors economic conditions, the creditworthiness of customers and government regulations and funding, both domestically and abroad. AbbVie regularly communicates with its customers regarding the status of receivable balances, including their payment plans and obtains positive confirmation of the validity of the receivables. AbbVie establishes an allowance for credit losses equal to the estimate of future losses over the contractual life of outstanding accounts receivable. AbbVie may also utilize factoring arrangements to mitigate credit risk, although the receivables included in such arrangements have historically not been a significant amount of total outstanding receivables.
Credit Facilities, Access to Capital and Credit Ratings
Credit Facilities
In January 2025, AbbVie entered into a new $3.0 billion five-year revolving credit facility that matures in January 2030 which is in addition to the existing $5.0 billion five-year revolving credit facility that matures in March 2028. The revolving
|
2025 Form 10-K|
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credit facilities are available to support AbbVie's commercial paper program and enable the company to borrow funds to meet liquidity requirements on an unsecured basis at variable interest rates and contain various covenants. At December 31, 2025, the company was in compliance with all covenants, and commitment fees under the revolving credit facilities were insignificant. No amounts were outstanding under the company's revolving credit facilities as of December 31, 2025 and December 31, 2024.
In April 2025, the company entered into a $4.0 billion 364-day term loan credit agreement. In May 2025, the company borrowed $2.0 billion under this term loan credit agreement which was outstanding and included in short-term borrowings on the consolidated balance sheet as of December 31, 2025.
In December 2023, in connection with the acquisitions of ImmunoGen and Cerevel Therapeutics, AbbVie entered into a $9.0 billion 364-day bridge credit agreement and $5.0 billion 364-day term loan credit agreement. In February 2024, AbbVie borrowed and repaid $5.0 billion under the term loan credit agreement. Subsequent to the $15.0 billion issuance of senior notes in February 2024, AbbVie terminated both the bridge and term loan credit agreements in the first quarter of 2024.
Access to Capital
The company intends to fund short-term and long-term financial obligations as they mature through cash on hand, future cash flows from operations or has the ability to issue additional debt. The company's ability to generate cash flows from operations, issue debt or enter into financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for the company's products or in the solvency of its customers or suppliers, deterioration in the company's key financial ratios or credit ratings, or other material unfavorable changes in business conditions. At the current time, the company believes it has sufficient financial flexibility to issue debt, enter into other financing arrangements and attract long-term capital on acceptable terms to support the company's growth objectives.
Credit Ratings
In February 2026, Moody's Investors Service upgraded AbbVie's senior unsecured long-term credit rating to A2 with a stable outlook from A3 with a positive outlook and upgraded AbbVie's short-term credit rating to Prime-1 from Prime-2. There were no other changes in the company's credit ratings during the year ended December 31, 2025. Unfavorable changes to the ratings may have an adverse impact on future financing arrangements; however, they would not affect the company's ability to draw on its credit facilities and would not result in an acceleration of scheduled maturities of any of the company's outstanding debt.
Future Cash Requirements
Contractual Obligations
The following table summarizes AbbVie's estimated material contractual obligations as of December 31, 2025:
| (in millions) | Total | Current | Long-term | ||||||||||||||
| Long-term debt, including current portion | $ | 64,503 | $ | 6,000 | $ | 58,503 | |||||||||||
|
Interest on long-term debt(a)
|
35,243 | 2,712 | 32,531 | ||||||||||||||
|
Contingent consideration liabilities(b)
|
25,374 | 3,455 | 21,919 | ||||||||||||||
(a)Includes estimated future interest payments on long-term debt. Interest payments on debt are calculated for future periods using forecasted interest rates in effect at the end of 2025. Projected interest payments include the related effects of interest rate swap agreements. Certain of these projected interest payments may differ in the future based on changes in floating interest rates or other factors or events. The projected interest payments only pertain to obligations and agreements outstanding at December 31, 2025. See Note 10 to the Consolidated Financial Statements for additional information regarding the company's debt instruments and Note 11 for additional information on the interest rate swap agreements outstanding at December 31, 2025.
(b)Includes contingent consideration liabilities which are recorded at fair value on the consolidated balance sheet. Potential contingent consideration payments that exceed the fair value recorded on the consolidated balance sheet are not included in the table of contractual obligations. See Note 11 to the Consolidated Financial Statements for additional information regarding these liabilities.
AbbVie enters into certain unconditional purchase obligations and other commitments in the normal course of business. There have been no changes to these commitments that would have a material impact on the company's ability to meet either short-term or long-term future cash requirements.
|
| 2025 Form 10-K
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Income Taxes
Future income tax cash requirements include a one-time transition tax liability on a mandatory deemed repatriation of previously untaxed earnings of foreign subsidiaries resulting from U.S. tax reform enacted in 2017. The one-time transition tax liability was $1.1 billion, which is classified as a current liability as of December 31, 2025.
Liabilities for unrecognized tax benefits totaled $5.6 billion as of December 31, 2025. It is not possible to reliably estimate the timing of the future cash outflows related to these liabilities. See Note 14 to the Consolidated Financial Statements for additional information on these unrecognized tax benefits.
Short-term Borrowings
Short-term borrowings included $2.0 billion of a 364-day term loan and $499 million of commercial paper, which are classified as current liabilities as of December 31, 2025. See Note 10 to the Consolidated Financial Statements for additional information regarding the company's short-term borrowings.
Quarterly Cash Dividend
On October 31, 2025, AbbVie announced that its board of directors declared an increase in the company's quarterly dividend from $1.64 per share to $1.73 per share beginning with the dividend payable on February 17, 2026 to stockholders of record as of January 16, 2026. This reflects an increase of approximately 5.5% over the previous quarterly rate. The timing, declaration, amount of and payment of any dividends by AbbVie in the future is within the discretion of its board of directors and will depend upon many factors, including AbbVie's financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of AbbVie's debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by its board of directors.
Collaborations, Licensing and Other Arrangements
AbbVie enters into collaborative, licensing and other arrangements with third parties that may require future milestone payments to third parties contingent upon the achievement of certain development, regulatory or commercial milestones. Individually, these arrangements are insignificant in any one annual reporting period. However, if milestones for multiple products covered by these arrangements happen to be reached in the same reporting period, the aggregate charge to expense could be material to the results of operations in that period. From a business perspective, the payments are viewed as positive because they signify that the product is successfully moving through development and is now generating or is more likely to generate future cash flows from product sales. It is not possible to predict with reasonable certainty whether these milestones will be achieved or the timing for achievement. See Note 5 to the Consolidated Financial Statements for additional information on these collaboration arrangements.
U.S. Research and Development and Capital Investment
Subsequent to December 31, 2025, AbbVie announced a voluntary agreement with the U.S. government to further advance access and affordability of AbbVie's products in the U.S. while protecting and investing in U.S. pharmaceutical innovation. Under this voluntary agreement, AbbVie pledged $100 billion in U.S.-based research and development and capital investment, including manufacturing, over the next decade.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with generally accepted accounting principles in the United States requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses. A summary of the company's significant accounting policies is included in Note 2 to the Consolidated Financial Statements. Certain of these policies are considered critical as these most significantly impact the company's financial condition and results of operations and require the most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Actual results may vary from these estimates.
Revenue Recognition
AbbVie recognizes revenue when control of promised goods or services is transferred to the company's customers, in an amount that reflects the consideration AbbVie expects to be entitled to in exchange for those goods or services. Sales, value add and other taxes collected concurrent with revenue-producing activities are excluded from revenue. AbbVie generates revenue primarily from product sales. For the majority of sales, the company transfers control, invoices the customer and recognizes revenue upon shipment to the customer.
|
2025 Form 10-K|
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Rebates
AbbVie provides rebates to pharmacy benefit managers, state government Medicaid programs, insurance companies that administer Medicare drug plans, wholesalers, group purchasing organizations and other government agencies and private entities.
Rebate and chargeback accruals are accounted for as variable consideration and are recorded as a reduction to revenue in the period the related product is sold. Provisions for rebates and chargebacks totaled $65.1 billion in 2025, $59.3 billion in 2024 and $56.8 billion in 2023. Rebate amounts are typically based upon the volume of purchases using contractual or statutory prices, which may vary by product and by payer. For each type of rebate, the factors used in the calculations of the accrual for that rebate include the identification of the products subject to the rebate, the applicable price terms and the estimated lag time between sale and payment of the rebate, which can be significant.
In order to establish its rebate and chargeback accruals, the company uses both internal and external data to estimate the level of inventory in the distribution channel and the rebate claims processing lag time for each type of rebate. To estimate the rebate percentage or net price, the company tracks sales by product and by customer or payer. The company evaluates inventory data reported by wholesalers, available prescription volume information, product pricing, historical experience and other factors in order to determine the adequacy of its reserves. AbbVie regularly monitors its reserves and records adjustments when rebate trends, rebate programs and contract terms, legislative changes, or other significant events indicate that a change in the reserve is appropriate. Historically, adjustments to rebate accruals have not been material to net earnings.
The following table is an analysis of the three largest accruals for rebates and chargebacks, which comprise approximately 94% of the total consolidated rebate and chargebacks recorded as reductions to revenues in 2025.
| (in millions) |
Medicaid and Medicare Rebates |
Managed Care Rebates |
Wholesaler Chargebacks |
||||||||||||||
| Balance as of December 31, 2022 | $ | 5,198 | $ | 4,242 | $ | 1,143 | |||||||||||
| Provisions | 15,153 | 23,978 | 14,191 | ||||||||||||||
| Payments | (15,054) | (21,200) | (14,162) | ||||||||||||||
| Balance as of December 31, 2023 | 5,297 | 7,020 | 1,172 | ||||||||||||||
| Provisions | 15,866 | 24,127 | 14,782 | ||||||||||||||
| Payments | (13,756) | (25,622) | (14,797) | ||||||||||||||
| Balance as of December 31, 2024 | 7,407 | 5,525 | 1,157 | ||||||||||||||
| Provisions | 21,283 | 22,307 | 17,710 | ||||||||||||||
| Payments | (21,250) | (22,487) | (17,482) | ||||||||||||||
| Balance as of December 31, 2025 | $ | 7,440 | $ | 5,345 | $ | 1,385 | |||||||||||
Other Allowances
Other allowances include cash discounts, product returns, sales incentives and other adjustments, which are accounted for as variable consideration and are recorded as a reduction to revenue in the same period the related product is sold. Reserves for cash discounts and sales incentives are readily determinable because the company's experience of payment history is fairly consistent. Product returns can be reliably estimated based on the company's historical return experience. Cash discounts totaled $2.2 billion in 2025, $2.0 billion in 2024 and $2.0 billion in 2023.
Pension and Other Post-Employment Benefits
AbbVie engages outside actuaries to assist in the determination of the obligations and costs under the pension and other post-employment benefit plans that are direct obligations of AbbVie. The valuation of the funded status and the net periodic benefit cost for these plans are calculated using actuarial assumptions. The significant assumptions, which are reviewed annually, include the discount rate, the expected long-term rate of return on plan assets and the health care cost trend rates and are disclosed in Note 12 to the Consolidated Financial Statements.
The discount rate is selected based on current market rates on high-quality, fixed-income investments at December 31 each year. AbbVie employs a yield-curve approach for countries where a robust bond market exists. The yield curve is developed using high-quality bonds. The yield-curve approach reflects the plans' specific cash flows (i.e., duration) in calculating the benefit obligations by applying the corresponding individual spot rates along the yield curve. AbbVie reflects
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the plans' specific cash flows and applies them to the corresponding individual spot rates along the yield curve in calculating the service cost and interest cost portions of expense. For certain plans, AbbVie reviews various indices such as corporate bond and government bond benchmarks to estimate the discount rate.
AbbVie's assumed discount rates have a significant effect on the amounts reported for defined benefit pension and other post-employment plans as of December 31, 2025. A 50 basis point change in the assumed discount rate would have had the following effects on AbbVie's calculation of net periodic benefit costs in 2026 and projected benefit obligations as of December 31, 2025:
| 50 basis point | |||||||||||
| (in millions) (brackets denote a reduction) | Increase | Decrease | |||||||||
| Defined benefit plans | |||||||||||
| Net periodic benefit cost | $ | (22) | $ | 48 | |||||||
| Projected benefit obligation | (607) | 672 | |||||||||
| Other post-employment plans | |||||||||||
| Net periodic benefit cost | $ | (5) | $ | 6 | |||||||
| Projected benefit obligation | (47) | 52 | |||||||||
The expected long-term rate of return is based on the asset allocation, historical performance and the current view of expected future returns. AbbVie considers these inputs with a long-term focus to avoid short-term market influences. The current long-term rate of return on plan assets for each plan is supported by the historical performance of the trust's actual and target asset allocation. AbbVie's assumed expected long-term rate of return has a significant effect on the amounts reported for defined benefit pension plans as of December 31, 2025 and will be used in the calculation of net periodic benefit cost in 2026. A one percentage point change in assumed expected long-term rate of return on plan assets would increase or decrease the net period benefit cost of these plans in 2026 by $118 million.
The health care cost trend rate is selected by reviewing historical trends and current views on projected future health care cost increases. The current health care cost trend rate is supported by the historical trend experience of each plan. Assumed health care cost trend rates have a significant effect on the amounts reported for health care plans as of December 31, 2025 and will be used in the calculation of net periodic benefit cost in 2026.
Income Taxes
AbbVie accounts for income taxes under the asset and liability method. Provisions for federal, state and foreign income taxes are calculated on reported pre-tax earnings based on current tax laws. Deferred taxes are provided using enacted tax rates on the future tax consequences of temporary differences, which are the differences between the financial statement carrying amount of assets and liabilities and their respective tax bases and the tax benefits of carryforwards. A valuation allowance is established or maintained when, based on currently available information, it is more likely than not that all or a portion of a deferred tax asset will not be realized.
Litigation
The company is subject to contingencies, such as various claims, legal proceedings and investigations regarding product liability, intellectual property, commercial, securities and other matters that arise in the normal course of business. See Note 15 to the Consolidated Financial Statements for additional information. Loss contingency provisions are recorded for probable losses at management's best estimate of a loss, or when a best estimate cannot be made, a minimum loss contingency amount within a probable range is recorded. Accordingly, AbbVie is often initially unable to develop a best estimate of loss and therefore, the minimum amount, which could be zero, is recorded. As information becomes known, either the minimum loss amount is increased, resulting in additional loss provisions, or a best estimate can be made, also resulting in additional loss provisions. Occasionally, a best estimate amount is changed to a lower amount when events result in an expectation of a more favorable outcome than previously expected.
Valuation of Goodwill and Intangible Assets
AbbVie has acquired and may continue to acquire significant intangible assets in connection with business combinations that AbbVie records at fair value. Transactions involving the purchase or sale of intangible assets occur between companies in the pharmaceuticals industry and valuations are usually based on a discounted cash flow analysis incorporating the stage of completion. The discounted cash flow model requires assumptions about the timing and amount of future net cash flows, risk, cost of capital, terminal values and market participants. Each of these factors can significantly affect the value of the intangible asset. In-process research and development (IPR&D) acquired in a business combination is capitalized as an
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indefinite-lived intangible asset until regulatory approval is obtained, at which time it is accounted for as a definite-lived asset and amortized over its estimated useful life, or discontinuation, at which point the intangible asset will be written off. IPR&D acquired in transactions that are not business combinations is expensed immediately, unless deemed to have an alternative future use. Milestone payments made to third parties subsequent to regulatory approval are capitalized and amortized over the remaining useful life.
AbbVie reviews the recoverability of definite-lived intangible assets whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Goodwill and indefinite-lived intangible assets are reviewed for impairment annually or when an event occurs that could result in an impairment. See Note 2 and Note 7 to the Consolidated Financial Statements for additional information.
Annually, the company tests its goodwill for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. Some of the factors considered in the assessment include general macro-economic conditions, conditions specific to the industry and market, cost factors, the overall financial performance and whether there have been sustained declines in the company's share price. If the company concludes it is more likely than not that the fair value of the reporting unit is less than its carrying amount, a quantitative impairment test is performed. AbbVie tests indefinite-lived intangible assets for impairment by first assessing qualitative factors to determine whether it is more likely than not that the fair value is less than its carrying amount. If the company concludes it is more likely than not that the fair value is less than its carrying amount, a quantitative impairment test is performed.
For its quantitative impairment tests, the company uses an estimated future cash flow approach that requires significant judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, the selection of an appropriate discount rate, asset groupings and other assumptions and estimates. The estimates and assumptions used are consistent with the company's business plans and a market participant's views. The use of alternative estimates and assumptions could increase or decrease projected cash flows and the estimated fair value of the related intangible assets. Future changes to these estimates and assumptions could have a material impact on the company's results of operations. Actual results may differ from the company's estimates.
Contingent Consideration
The fair value measurements of contingent consideration liabilities are determined as of the acquisition date based on significant unobservable inputs, including the discount rate, estimated probabilities and timing of achieving specified development, regulatory and commercial milestones and the estimated amount of future sales of the acquired products. Contingent consideration liabilities are revalued to fair value at each subsequent reporting date until the related contingency is resolved. The potential contingent consideration payments are estimated by applying a probability-weighted expected payment model for contingent milestone payments and a Monte Carlo simulation model for contingent royalty payments, which are then discounted to present value. Changes to the fair value of the contingent consideration liabilities can result from changes to one or a number of inputs, including discount rates, the probabilities of achieving the milestones, the time required to achieve the milestones and estimated future sales. Significant judgment is employed in determining the appropriateness of certain of these inputs, which are disclosed in Note 11 to the Consolidated Financial Statements. Changes to the inputs described above could have a material impact on the company's financial position and results of operations in any given period.
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AbbVie Inc. published this content on February 20, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on February 20, 2026 at 19:40 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]