Just look to Gilead Sciences ( GILD) for an example of a company that sold off sharply upon the decline of its blockbuster drugs and has struggled ever since to regain any sort of meaningful growth momentum: Of course, there is no guarantee that will happen. If it can successfully bring a few more big wins to market from its current vaunted R&D pipeline, ABBV should be able to return to growth within a year or two of Humira losing its patent protection in the U.S. That said, there is more help for ABBV with Botox posting strong double-digit growth rates. This means that they would need to grow at roughly three times the rate of Humira's decline moving forward to successfully offset its declines. While both drugs are growing rapidly at 63.7% and 53.6%, respectively, in Q1, they currently only equate to 30% of Humira's total revenue contribution. The company is also leaning heavily on Skyrizi and Rinvoq to help offset declines in Humira revenue. ABBV boasts a vaunted R&D pipeline with scores of products in Phase 1 through Phase 3 trials and even several rapidly growing current drugs in its portfolio.įor example, the Immunology business saw revenue grow by 6.9% year-over-year despite Humira sales declining by 2.7%. The good news for the company is that it knew this day was coming and has reinvested a large percentage of Humira earnings in recent years to develop additional sources of revenue to help offset the declines in sales and profitability that are likely to hit the Humira business hard in the next few years. patent protection for Humira expires in 2023. As a result, it remains a vital source of income for the company, and we therefore expect ABBV to face stiff top and bottom line headwinds once the U.S. As a result, it accounts for nearly 40% of the company's total revenue and an even higher percentage of the company's total earnings. In 2021, Humira generated over $20 billion in revenue, an all-time high for the drug, despite it already having lost its international patent protection. Much of ABBV's success is due to its wildly profitable and best-selling drug Humira, losing its top-selling status only to the COVID-19 shot in 2021. ![]() In this article, we examine its current business model dynamics and valuation to explain why we rate the stock a Hold at present. patent protection set to expire next year. However, in the wake of reporting Q1 results, ABBV has seen a sharp pullback as general market dreariness combined with a reset in sky-high investor expectations for ABBV to lead to a re-pricing of the stock:ĭespite the pullback in the stock price, ABBV still trades at an elevated level relative to its recent history and its business model faces some near-term uncertainty with its blockbuster Humira drug having already lost its international patent protection and its U.S. AbbVie ( NYSE: ABBV) has proven to be a tremendous wealth compounding machine over the years, massively outperforming the S&P 500 ( SPY), growing its dividend per share every year, and generating robust dividend growth since it went public via a spin-off from Abbott Laboratories ( ABT ) in 2013:
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