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3 Big Reasons Why AbbVie Isn't Worried About Humira

Keith Speights, The Motley Fool

AbbVie (NYSE: ABBV) raised some eyebrows -- and some concerns -- in its Q3 conference call discussion of the early days of European biosimilar competition for Humira. CEO Rick Gonzalez said at the time that discounting for Humira biosimilars was steeper than the company expected. The obvious implication is that Humira sales outside of the U.S. could decline more quickly than projected.

The threat to Humira came up during AbbVie's presentation and question-and-answer session on Wednesday at the J.P. Morgan Healthcare Conference. But Gonzalez and AbbVie President Michael Severino expressed confidence that the big pharma company would continue to grow for years to come despite challenges for its top-selling drug. Here are three big reasons AbbVie isn't worried about Humira. 

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Image source: Getty Images.

1. A strong lineup beyond Humira

Michael Severino addressed the threat to Humira head-on in his presentation at the J.P. Morgan conference. His first response to the impact of biosimilar competition was to point out the strong growth and future prospects for two other AbbVie drugs, Imbruvica and Venclexta.

Severino noted that the two hematology drugs currently represent a $4 billion franchise with double-digit percentage sales growth. He said that AbbVie expects Imbruvica and Venclexta combined will generate over $9 billion of risk-adjusted incremental annual sales by 2025.

In addition, Severino singled out a couple of other current products, Orilissa (elagolix) and Mavyret. Orilissa was approved by the FDA last year for the treatment of endometriosis, an indication for which no new treatment has been introduced in decades. AbbVie plans to file for approval of the drug in treating uterine fibroids later this year. The company thinks that Orilissa will contribute upwards of $2 billion in incremental annual risk-adjusted sales by 2025.

Rick Gonzalez acknowledged that Mavyret won't be "a big growth vehicle" in the years ahead. However, he said the hepatitis C virus (HCV) drug would nonetheless generate strong cash flow for years to come. 

2. Blockbuster pipeline candidates

Another key reason behind AbbVie's confidence is its pipeline, especially in the area of immunology. Severino stated that AbbVie will "evolve from a single product to a portfolio of therapies" in immunology over the next few years.

The first immunology product likely to join Humira is risankizumab. An FDA approval decision for the drug as a treatment for psoriasis is expected by late April 2019. Risankizumab could soon be followed by upadacitinib. AbbVie expects an FDA decision on the drug as a treatment for rheumatoid arthritis in the second half of the year. 

AbbVie is also pursuing additional indications for both drugs. The company thinks that risankizumab and upadacitinib will be best-in-class therapies that together generate $10 billion or more in incremental annual sales by 2025.

In addition, Severino said that the company's neuroscience pipeline candidates should begin contributing to growth by the middle of the next decade. AbbVie's pipeline includes a late-stage candidate targeting Parkinson's disease as well as experimental Alzheimer's disease and multiple sclerosis drugs in earlier-stage clinical studies.

3. Time is on its side

It's also important to remember that Humira isn't going away anytime soon. Severino stated that AbbVie expects the drug to remain at the top of the immunology market through 2022. That's in line with the thinking from market research company EvaluatePharma, which projects that Humira will remain the top-selling drug in the world through 2024.

Although Humira is being challenged by biosimilars in Europe, AbbVie continues to state that there probably won't be direct biosimilar competition in the U.S. until 2023. That gives the company plenty of time for its other drugs and pipeline candidates to ramp up.

Gonzalez also said that Humira's sales should continue to grow in the U.S., although he acknowledged that the growth rates have moderated and will continue to do so. He stated that Humira has been "a phenomenal story" and will "continue to be an important growth story" for AbbVie.

The magic number

There's one number that investors will want to pay special attention to: $35 billion. That's the minimum level of risk-adjusted sales that AbbVie projects it will generate from drugs other than Humira by 2025. By comparison, AbbVie's total revenue in 2017 including Humira was $28.2 billion.

Some might question whether AbbVie can achieve that goal. Skepticism certainly is higher now than in the past after cancer drug Rova-T flopped in clinical studies.

But the prospects for AbbVie's other drugs and pipeline candidates discussed by Gonzalez and Severino don't seem to be just pie in the sky. AbbVie should be able to continue doing what it's been doing since being spun off in 2013: deliver revenue growth, deliver earnings growth, and deliver a steadily increasing dividend. 

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Keith Speights owns shares of AbbVie. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.