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AbbVie Is Looking For New Growth Before Generic Competitors Roll In

Aug. 07, 2018 9:27 PM ETAbbVie Inc. (ABBV)AMGN, BIIB, BMY, VTRS21 Comments


  • AbbVie is facing generic competition for Humira in Europe and the United States in the coming months and years.
  • Humira is the company's top-selling drug with $16 billion in revenue per year and accounts for 60% of revenue, but a new game plan will be needed to keep growth.
  • AbbVie has beat earnings estimates the past four quarters because of Humira, but that could all change when biosimilars take shape.
  • The CEO has expressed that if the right opportunity comes along, he would not be opposed to a huge $20-30 billion M&A deal.
  • Members of my private investing community, Biotech Analysis Central, can follow this idea, as well as my other top picks with access to my model portfolio. Start your free trial today >>

AbbVie (NYSE:ABBV) will be in a huge bind in the coming months and years. That's because its top-selling product, Humira, will have generic competition rolling out. That would cause a huge loss in sales, thus, it is scrambling in hopes of potentially acquiring another pharmaceutical company to get another blockbuster drug in its coffers. A host of pipeline setbacks have not helped at all either. However, with the cash on hand, it can definitely strike a good deal. For that reason, I believe AbbVie is a buy.

Reliance On Humira

It is no secret that Humira is a blockbuster biologic that produces as much as $16 billion in revenue per year. It is a huge revenue stream, because Humira on average costs $50,000 per patient. As a matter of fact, sales of Humira account for about 60% of AbbVie's total revenue. There are a few competitors on its heels, i.e., Amgen (AMGN) and Boehringer Ingelheim. The problem is that neither of these companies can sell their biosimilars quite yet. That's because AbbVie is currently in a legal battle with Boehringer Ingelheim over the patent for Humira. In terms of Amgen's biosimilar, AbbVie had decided that both companies should drop the patent lawsuit. In exchange, Amgen agreed not to sell its biosimilar of Humira, known as Amjevita, until 2023 in the United States. That gives AbbVie at least some cushion to build its pipeline in time to avoid heavy losses when its patent expires for Humira.

Recent Earnings

The most recent second-quarter earnings for AbbVie was strong. The company reported EPS of $2 per share, which beat analysts' estimates of $1.98 per share. It produced $8.2 million in revenue, while analysts were expecting $8.21 billion. The good news is that AbbVie has been able to beat earnings expectations for the last four quarters in a row. The problem, as I

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This article was written by

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Actionable ideas on small-large cap biotech stocks through deep analysis.

I am the Founder of Biotech Analysis Central, A subscription service on Seeking Alpha's Marketplace. If you want to learn more about biotech investing or you want to check out my biotech analysis you can do so with a free 2-week trial to my service. Just hit the "Learn More" button on the bottom of the Marketplace Research Tab. I have a Bachelors of Applied Science Degree In Technology Management, Industrial and Business Services Management from St. Petersburg College Florida. I have been investing in biotech stocks for many years, and I prefer to invest as a long term investor. With that In mind I seek stocks that have long term value! I primarily Like to Invest In biotechnology stocks and I accept the risks. I Write for the Healthcare Sector and Stock market in general. I contribute to Seeking Alpha.

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