United states securities and exchange commission

Table of Contents
63
Revenues from Collaborative and Other 
Relationships
Other revenues from collaborative and other 
relationships include revenues earned under our 50% 
share of the co-promotion profits or losses of 
ZINBRYTA in the U.S. with AbbVie and revenues from 
our technical development and manufacturing 
services agreements with Samsung Bioepis. Prior to 
the spin-off of our hemophilia business, other 
revenues from collaborative and other relationships 
also included revenues earned under our 
manufacturing services agreement with Sobi on 
shipments of ELOCTA and ALPROLIX to Sobi and 
royalties from Sobi on sales of ELOCTA and ALPROLIX 
in their territory, which included substantially all of 
Europe, Russia and certain markets in Northern Africa 
and the Middle East. Bioverativ assumed all of our 
rights and obligations under our agreement with Sobi 
on February 1, 2017.
For 2017 compared to 2016, the decrease in 
other revenues from collaborative and other 
relationships was primarily due to the impact of the 
spin-off of our hemophilia business on February 1, 
2017, partially offset by higher revenues earned 
under our manufacturing services agreement with 
Samsung Bioepis.
For 2016 compared to 2015, the decrease in 
other revenues from collaborative and other 
relationships was primarily due to a net overall loss in 
the collaboration with AbbVie of $21.9 million within 
the U.S. and lower revenues earned under our 
manufacturing services agreement with Samsung 
Bioepis, partially offset by an increase in ELOCTA 
shipments made under our manufacturing services 
agreement with Sobi.
For additional information on our collaborative 
and other relationships, please read Note 20, 
Collaborative and Other Relationships, to our 
consolidated financial statements included in this 
report.
Other Royalty and Corporate Revenues
We receive royalties from net sales on products 
related to patents that we have out-licensed and we 
record other corporate revenues primarily from 
amounts earned under contract manufacturing 
agreements.
For 2017 compared to 2016, the increase in 
royalty and other corporate revenues was primarily 
due to an increase in sales of the underlying products 
from which we receive royalties and higher contract 
manufacturing revenues related to the volume of 
shipments of drug substance production provided to 
our strategic partners, including Bioverativ.
For 2016 compared to 2015, the increase in 
royalty and other corporate revenues was primarily 
due to higher contract manufacturing revenues related 
to drug substance manufacturing provided to a 
strategic partner.

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Table of Contents
64
Reserves for Discounts and Allowances
Revenues from product sales are recorded net 
of reserves established for applicable discounts and 
allowances, including those associated with the 
implementation of pricing actions in certain 
international markets where we operate.
These reserves are based on estimates of the 
amounts earned or to be claimed on the related sales 
and are classified as reductions of accounts 
receivable (if the amount is payable to our customer) 
or a liability (if the amount is payable to a party other 
than our customer). Our estimates take into 
consideration our historical experience, current 
contractual and statutory requirements, specific 
known market events and trends, industry data and 
forecasted customer buying and payment patterns. 
Actual amounts may ultimately differ from our 
estimates. If actual results vary, we adjust these 
estimates, which will have an effect on earnings in the 
period of adjustment. 
Reserves for discounts, contractual adjustments 
and returns that reduced gross product revenues are 
summarized as follows:
For the years ended December 31, 2017, 2016 
and 2015, reserves for discounts and allowances as 
a percentage of gross product revenues were 22.0%, 
21.3% and 19.3%, respectively.
Discounts
Discounts include trade term discounts and 
wholesaler incentives. 
For 2017 compared to 2016, the decrease in 
discounts was primarily driven by the impact from the 
spin-off of our hemophilia business on February 1, 
2017, partially offset by an increase in rest of world 
product revenues, due in part to an increase in 
biosimilar revenues, as well as an increase in gross 
selling prices.
For 2016 compared to 2015, the increase in 
discounts was primarily driven by increases in gross 
selling price, contractual discount rates and volume 
related to our hemophilia products.
Contractual Adjustments
Contractual adjustments primarily relate to 
Medicaid and managed care rebates, co-payment 
assistance (copay), VA and PHS discounts, specialty 
pharmacy program fees and other government rebates 
or applicable allowances. 
For 2017 compared to 2016, the increase in 
contractual adjustments was primarily due to higher 
managed care rebates and Medicaid and other 
governmental rebates and allowances in the U.S., due 
in part to an increase in gross selling prices and the 
launch of SPINRAZA in the U.S. in the fourth quarter 
of 2016, partially offset by the impact from the spin-
off of our hemophilia business on February 1, 2017.
For 2016 compared to 2015, the increase in 
contractual adjustments was primarily due to higher 
Medicaid and other governmental rebates and 
allowances in the U.S. and managed care rebates, 
due in part to an increase in gross selling prices.
Returns
Product return reserves are established for 
returns made by wholesalers. In accordance with 
contractual terms, wholesalers are permitted to return 
product for reasons such as damaged or expired 
product. The majority of wholesaler returns are due to 
product expiration. Provisions for product returns are 
recorded in the period the related revenue is 
recognized, resulting in a reduction to product sales. 
For 2017 compared to 2016, return provisions 
were relatively consistent.
For 2016 compared to 2015, return reserves 
decreased primarily due to a reduction in return rates 
based on recent experiences of returned products.
For additional information on our reserves, 
please read Note 5, Reserves for Discounts and 
Allowances, to our consolidated financial statements 
included in this report.

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