Businessmodel of AbbVie

Customer Segments

AbbVie directs its primary marketing efforts toward professionals and organisations within the healthcare and medical industry, notably physicians, managed care providers, health maintenance organisations, pharmacy benefit managers, hospitals, and state and federal government agencies. The Company also markets directly to consumers, however, the Company’s products can only be purchased with a valid prescription.

AbbVie reaches its target markets largely indirectly, making the majority of its sales to wholesalers, distributors, government agencies, health care facilities, specialty pharmacies, and independent retailers. In 2015, three wholesale distributors – McKesson Corporation, Cardinal Health, and AmerisourceBergen Corporation – accounted for all of AbbVie’s sales in the US. No individual wholesaler accounted for more than 43% of the Company’s 2015 gross revenue in the US.

AbbVie makes the majority of its sales in its native US. The Company, however, also serves a significant international customer base across Europe, Asia Pacific, and America. In 2015 the Company generated more than $1 billion in revenue in only one international market, Germany.

Value Propositions

AbbVie provides value to its customers in the following ways:

• Its reputation and industry standing, with the Company established as a reliable provider of high-quality pharmaceutical products, serving a range of customers, including high-profile medical distributors and wholesalers;
• Its broad portfolio of products, with the Company providing a broad range of products designed to treat a varied spectrum of diseases and conditions, targeting autoimmune diseases, oncology, virology, neurological disorders, metabolic diseases, and other serious health conditions.
• Its extensive patent portfolio, with the Company owning and or licensing a wide range of patented products and technologies that enable it to produce unique products that cannot be found elsewhere;
• Its international reach, with the Company serving a large domestic customer base, as well as a significant number of clients across Europe, Asia Pacific, and Latin America; and
• Its commitment to research and development, with the Company devoting a substantial portion of its resources each year to research and development activities, with a view to producing cutting edge products for its clients. ### Channels

AbbVie operates a website at www.abbvie.com, through which it provides information on its various products, research operations, and corporate activities. The Company also operates separate websites for many of its products, including www.duopa.com, www.sndrogel.com, and www.creon.com. These product-specific websites offer online customer portals, through which clients can access further information, resources, and a range of support programs.

AbbVie operates its own in-house sale force, which is organized by geographic region and product line. The Company’s sales personnel operate out of the Company’s international network of offices, spanning the Americas, Asia Pacific, and Europe. In the US, AbbVie primarily distributes pharmaceutical products via a network of independent wholesale distributors, while outside the US, sales are made either directly to customers or through distributors, depending on the market served. Certain of AbbVie’s products are co-marketed or co-promoted in collaboration with other pharmaceutical companies and distributors.

Customer Relationships

AbbVie offers a range of services and resources to its customers on a self-service basis through its online customer portals, which enable clients to manage their accounts independently. The Company, however, does not operate an online sales channel.

AbbVie makes sales to distributors and wholesalers through its in-house sales force, which consults directly with customers, establishing the details of its sales and distribution contracts on a case-by-case basis. The Company works closely with its largest wholesale distribution customers, with which it seeks to cultivate long-term business relationships.

AbbVie’s larger clients, notably distributors such as McKesson Corporation, Cardinal Health, and AmerisourceBergen Corporation, have their own account management teams that provide ongoing support and assistance. Customers are also able to access support more generally by contacting the Company over the phone or via an online contact form. Customers can alternatively access a range of information and resources through the AbbVie website, including FAQs and guides on policy and innovation.

Additionally, AbbVie operates several social media accounts – including with Facebook, Twitter, LinkedIn, and YouTube – through which customers can interact with the Company directly.

Key Activities

AbbVie is a research-based biopharmaceutical company. It is engaged primarily in the development, marketing, and sale of products and therapies designed to treat a range of diseases and conditions, specialising in chronic autoimmune diseases, in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C, and human immunodeficiency virus; neurological disorders, such as Parkinson’s disease; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; and various other serious health conditions.

The Company has extensive research and development operations in place, and offers a portfolio of products that utilise the Company’s various patented designs and technologies. This includes HUMIRA, IMBRUVICA, HCV products, additional virology products, metabolics and hormones products, endocrinology products and other products.

Key Partners

AbbVie works closely with a network of international partners in the production and distribution of its treatments. These partners can be categorised broadly as follows:

• Supplier and Vendor Partners, comprising suppliers of raw materials, ingredients and equipment used in the manufacture of the Company’s various products, as well as suppliers of services and technologies that are utilised across the Company more broadly;
• Pharmaceutical Partners, comprising a range of pharmaceutical companies that assist in developing innovative products alongside the Company, and co-market certain products in jurisdictions around the world;
• Corporate Responsibility Partners, comprising various non-profits and charitable organisations, with which the Company collaborates on social and community projects;
• Channel and Distribution Partners, comprising distribution and logistics companies that assist in delivering the Company’s products to customers around the world, and extending its marketing and sales reach; and
• Strategic and Alliance Partners, comprising a range of companies and organisations with which the Company shares certain resources and collaborates on joint projects. AbbVie has launched a number of partnerships in recent years. This includes a research partnership with Google’s biotechnology unit Calico, a tie-up with start-up BioArctic to develop and commercialise antibody products, and a deal with dietitian Joy Bauer to raise awareness of the importance of a healthy diet and lifestyle.

Key Resources

AbbVie’s key resources are its intellectual properties and technologies, its raw materials and supply chain, its manufacturing and distribution infrastructure, its IT and communications infrastructure, its partnerships, and its personnel – notably its technical engineering staff.

AbbVie owns or has licensed rights to a substantial number of patents and patent applications that are key to its operations. Searches of records published by the US Patent and Trademark Offices identified numerous patent applications filed in AbbVie’s name, including applications entitled ‘Guanidine compounds, and use thereof as binding partners for 5-HT5 receptors’, ‘Crystaline forms of HCV inhibitor’ and ‘Carbidopa and L-dopa prodrugs and methods of use’.

AbbVie additionally owns a network of important physical properties, notably its manufacturing facilities. This principally includes its major production facilities in Illinois, Massachusetts, and Puerto Rico. The Company also owns or lease various distribution centres, and research and development facilities.

Cost Structure

AbbVie incurs costs in relation to the development of its products, the procurement of supplies and materials, the operation of its manufacturing and distribution infrastructure, the maintenance of its IT and communications infrastructure, the operation of its sales and marketing channels – including the implementation of advertising campaigns, the management of its partnerships, and the retention of its personnel.

In 2015 AbbVie recorded total operating costs in the amount of $15.32 billion. This included total cost of products sold of $4.50 billion, research and development costs totalling $4.29 billion, and selling, general, and administrative expenses – including advertising and marketing costs – of $6.39 billion.

Revenue Streams

AbbVie generates revenue through the manufacture and sale of a range of pharmaceutical and products and treatments. The Company also generates a small portion of its revenue through the provision of related services.

In 2015 AbbVie generated annual net revenue of $22.86 billion, up on the $19.96 billion recorded by the Company the previous year. More than 60% of the Company’s 2015 net revenue, around $14.01 billion, was generated by sales of the Company’s HUMIRA product, which is sold across more than 60 markets, including Japan, China, Brazil, and Australia. Only one other of AbbVie’s products accounted for more than $1 billion in net revenue for the year, VIEKIRA, which recorded accounted for $1.64 billion in net revenue.