AbbVie, Inc. ABBV resolved its pending litigation with Boehringer Ingelheim regarding the latter’s proposed biosimilar version of AbbVie’s blockbuster rheumatoid arthritis drug, Humira in the United States. Per the settlement, AbbVie granted Boehringer Ingelheim a non-exclusive license to launch its biosimilar Humira in the United States beginning Jul 1, 2023. With this settlement, AbbVie has resolved all Humira-related patent litigation in the United States.
Per the terms of the settlement, Boehringer Ingelheim will pay royalties to AbbVie once its cheaper version is launched. AbbVie will make no payments to Pfizer.
Shares of AbbVie were up more than 2% on Tuesday in response to the patent settlement announcement. AbbVie’s stock has declined 14.9% this year so far compared with a decrease of 2.7% recorded by the industry.
Humira is a key driver of AbbVie’s revenues, accounting for around 61% of its total sales. Currently approved for 13 indications, Humira sales increased 8.2% in 2018 to almost $20 billion backed by robust demand trends despite new competition.
With Humira accounting for such a significant amount of AbbVie’s total sales, the entry of biosimilars will have a huge impact on the company’s financials.
However, AbbVie has successfully struck similar licensing deals with seven other generic manufacturers — Pfizer PFE, Momenta, Amgen AMGN, Mylan MYL, Fresenius Kabi Sandoz and Biogen/Samsung Bioepis — to protect its U.S. revenues from the drug. Per the settlements, Humira biosimilars are expected to be launched in the United States at different times in 2023.
The settlements give AbbVie more time to strengthen its pipeline with products that are capable of making up for the expected sales decline when Humira biosimilars are launched. AbbVie expects to launch several new products including yet-to-be-launched immunology drugs Skyrizi (risankizumab) and upadacitinib or line extensions of marketed drugs before Humira biosimilar competition begins in the United States in 2023. Skyrizi and upadacitinib, which demonstrated differentiated clinical profiles versus Humira, are on track for launch in 2019. Skyrizi was approved by the FDA to treat plaque psoriasis last month.
However, AbbVie is already facing direct biosimilar competition in Europe and other countries, which account for approximately 25% of total global Humira revenues. Humira biosimilars were launched in the EU in October 2018. In 2019, AbbVie expects a decline of 30% or $2 billion in international Humira sales.
AbbVie currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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