Morningstar | AbbVie and Pfizer Settle on Humira Patents, Reducing the Likelihood of an At-Risk Launch in the U.S.
While AbbVie holds a strong portfolio of marketed and pipeline drugs, the increasing competition to the company's key drug Humira should slow the growth for the company. At over 50% of total sales and a higher portion of earnings (due to higher margin revenue), Humira is a key determinant of AbbVie's performance over the next three years. With approvals in rheumatoid arthritis, psoriasis, and Crohn's disease, Humira should continue to grow in 2018 as these markets as penetration rates are below 25% on average, but longer-term challenges are emerging. Despite a favorable near-term outlook for Humira in 2018, uncertainty around encroaching competition will likely weigh on investor sentiment toward the company. In particular, new JAK inhibitors, IL-17 and IL-23 antibodies represent major drug advancements in rheumatoid arthritis and psoriasis, which will likely lead to some market share losses for Humira. Also, while Humira's biologic composition and longer-lasting patents may deter generic completion following the late-2016 key patent loss in the U.S. and the 2018 patent loss in Europe, we model close to 20% annual revenue declines for Humira by 2021. Partly offsetting Humira's eventual declines, AbbVie looks well-positioned with the next generation immunology drugs. In particular, pipeline drugs have shown improved efficacy and safety over Humira and other currently leading treatment options. Beyond immunology, cancer drug Imbruvica is the next-biggest sales contributor. Imbruvica's strong clinical data in several forms of blood cancer should lead to peak sales above $6 billion. AbbVie's remaining drugs are largely mature with patent expirations long past, but have manufacturing or specific dosing complexities which make generic competition less likely. Looking forward, AbbVie's pipeline is weighted heavily toward new cancer drugs. In particular, AbbVie's pipeline should lead to an increasingly strong position in blood cancer. The company should be able to leverage its solid entrenchment with Imbruvica to launch the new drugs.AbbVie is a research-based biopharmaceutical company. The company's products are focused on treating conditions such as chronic autoimmune diseases in rheumatology, gastroenterology and dermatology; oncology, including blood cancers; virology, including hepatitis C virus and human immunodeficiency virus; neurological disorders, such as Parkinson's disease; metabolic diseases, including thyroid disease and complications associated with cystic fibrosis; pain associated with endometriosis; as well as other serious health conditions. The company also has medicines in clinical development across immunology, oncology and neuroscience, with additional targeted investment in cystic fibrosis and women's health.
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