E Under The Spotlight: AbbVie

AbbVie is a global, research-driven biopharmaceutical company committed to developing innovative advanced therapies for some of the world's most complex and critical conditions. The company's mission is to use its expertise and innovation to improve treatments across four primary therapeutic areas: immunology, oncology, virology and neuroscience. In more than 75 countries, AbbVie employees are working every day to advance health solutions.


AbbVie (ABBV) is a leading biotechnology company that was formed in 2013 following its separation from Abbott Laboratories. AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in gastroenterology, rheumatology and dermatology; oncology, including blood cancers; virology, including hepatitis C (HCV) and human immunodeficiency virus (HIV); neurological disorders, such as Parkinson's disease and multiple sclerosis; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; as well as other serious health conditions. 
HUMIRA is the company’s leading biologic therapy approved to treat a variety of autoimmune diseases. HUMIRA accounted for 61% of the company’s revenues in 2018. In addition to dedicating research and development resources to further expand indications for HUMIRA, AbbVie has invested in acquisitions and strategic partnerships, including with Johnson & Johnson, to accelerate the research and development of newand innovative products. 
As a result, AbbVie has a promising pipeline of new medicines, including more than 50 investigational programs in clinical development across such important medical specialties as immunology, virology, oncology and neurology, with additional targeted investment in cystic fibrosis and women's health.

AbbVie is on track to launch more than 20 new products through 2020 with non-HUMIRA sales expected to grow to more than $35 billion by 2025.   


Thanks to substantial cash flows, management is committed to returning cash to shareholders through a strong and growing dividend. AbbVie has increased the dividend 168% since inception. The company announced an 11.5% increase in the dividend for fiscal 2019 to $4.28 per share on an annualized basis with the dividend currently yielding a healthy 5.3%. In addition, the company announced a new $5 billion share repurchase program. 

For the full 2018 year, AbbVie’s revenues increased 16% to $32.8 billion with net income up 7% to $5.7 billion and EPS up 11% to $3.66. On an adjusted basis, EPS grew 41% to $7.91 driven by an 8% increase in full year global HUMIRA sales to $19.9 billion. 

The loss of patent protection for HUMIRA in international markets is expected to result in a 30%-35% drop in international HUMIRA sales in fiscal 2019 due to aggressive discounting by biosimilar competitors.HUMIRA does not lose patent protection in the U.S. until 2023 and is expected to remain the market leader treating more than one million patients in 15 indications until then. 
Despite absorbing approximately $2.4 billion in erosion of sales due to competition, AbbVie expects sales in 2019 to increase 1% on a constant currency basis with the company generating double-digit EPS growth in the range of $7.39 to $7.49 even as the firm funds five major new product launches during the year, each with multi-billion dollar sales potential. Long-term investors may want to inject AbbVie into their portfolio, a HI-quality biotech firm with market-leading products, a growing new product pipeline, strong cash flows, substantial share repurchases and a healthy dividend. Buy.

Disclosure: None.

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