Abbvie bets on strong Humira rebound

AbbVie is finally offering answers to questions investors have been asking since the drugmaker spun off from Abbott Laboratories in 2012: How badly will the loss of patent protection for AbbVie’s top-selling drug hurt and how long will it take to recover?

For the first time, AbbVie last month gave detailed projections for revenue trends after Humira loses protection from generic competition in the U.S. CEO Richard Gonzalez told an investor conference that sales will decline when Humira copycats invade the U.S. market in 2023, rise modestly in 2024 and reach high-single-digit growth in 2025 and beyond.

The prediction of a rapid rebound dispels some of the uncertainty that has hovered over AbbVie as it nears the end of a long exclusivity period for its blockbuster drug. Humira sales peaked at $19.9 billion in 2018, accounting for 61 % of AbbVie’s revenue. But international sales of Humira sank 13.6 % last year when European patents expired, even as rising U.S. sales pushed overall revenue for the drug up 3 % to $19.8 billion.

Still, Gonzalez’s forecast comes with a big blank. He doesn’t say how much revenue will drop in 2023. Analysts project a 7 % decline to $54 billion, as Humira sales plummet 36 % to $12.5 billion. Wall Street expects Humira sales to plunge another 32 % to $8.5 billion in 2024 and continue falling thereafter.

The drugmaker had been reluctant to project beyond 2023, particularly after its initial estimate for Humira’s 2018 loss of exclusivity in Europe turned out to be too optimistic.

Now another optimistic projection underpins the company’s rosy outlook. AbbVie is counting on two new immunology drugs to fill much of the Humira gap. Gonzalez predicted Rinvoq and Skyrizi will generate combined annual sales of $15 billion by 2025, an ambitious target for products that posted revenue of $2.3 billion last year.

“We are confident that Rinvoq and Skyrizi have the ability to offset any level of Humira biosimilar erosion by 2025, while continuing to maintain strong growth through the rest of the decade,” Gonzalez said.

AbbVie is counting on new immunology drugs Skyrizi and Rinvoq to fill the gap when Humira sales plummet in 2023 as copycat drugs invade the U.S market.

AbbVie shares moved up less than 1 % on the forecast, reflecting skepticism among analysts who expect Rinvoq and Skyrizi to generate closer to $12 billion in 2025. At $108.53 at closing on Feb. 4, the stock has declined 2 % over the past three years on persistent worries about post-Humira prospects.

“They’re not going to fully replace Humira, but they’re certainly growing very nicely and are going to help supplement that loss of sales in the mid-2020s,” says Edward Jones analyst Ashtyn Evans.

The astronomical growth Gonzalez projects for Rinvoq and Skyrizi isn’t unheard of, Evans says, recalling Merck’s immuno-oncology blockbuster Keytruda: “The key is the additional indications.”

By 2025, Rinvoq and Skyrizi are expected to be approved to treat all the major diseases Humira treats, including rheumatoid arthritis and psoriasis—plus atopic dermatitis, which AbbVie says is a large and underpenetrated market.

Additionally, oncology drugs like Imbruvica and Venclexta should help mitigate the post-Humira pressure, Morningstar analyst Damien Conover wrote Feb. 3.

“The firm’s ability to drive growth beyond 2023 will be largely driven by its pipeline, which lacks a high number of late-stage assets,” Conover writes. “However, the early-stage pipeline is focused in the right areas of unmet medical need of oncology, immunology, and neurology, which can advance quickly to the market if favorable data is achieved.”

Analysts tend to agree that last year’s $63 billion Allergan acquisition, which didn’t come with a notable pipeline of new products, won’t boost AbbVie’s growth rate. But by enlarging the overall revenue base to a projected $55.7 billion in 2021, Allergan softens the impact of declining Humira sales, which now represent less than 40 % of total revenues.

“This is how the drug industry works: You create a blockbuster success, and then it becomes the giant hole,” says Erik Gordon, professor at the University of Michigan’s Ross School of Business. “The narrative that AbbVie had to escape is that AbbVie equals Humira,” and Rinvoq and Skyrizi are helping it do that, he says.

“It won’t be the company it was when it had Humira,” Gordon says, “but it can be a different company that’s a good company.”



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