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AbbVie Q1: Story of Humira and the 7 Dwarfs

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In its first four months of existence, AbbVie (NYSE: ABBV  ) rewarded investors with gains of almost 26%. Going into month five, those gains seem likely to increase. The spinoff of Abbott Labs (NYSE: ABT  ) announced solid first-quarter results before the market opened on Friday. Shares increased more than 1% in early trading. Here are the highlights from the quarter.

By the numbers
AbbVie reported adjusted earnings for the first quarter of $0.68 per share. That result beat the company's prior guidance as well as the average analyst estimate of $0.66 per share. On a GAAP basis, first-quarter diluted earnings were $0.60 per share.

The company announced first-quarter revenue of nearly $4.33 billion, which beat the consensus analysts' estimate of $4.29 billion. This level reflects a 3.7% increase compared with first-quarter results from 2012, when the brands now belonging to AbbVie were part of Abbott. When the impact of foreign exchange fluctuations is excluded, revenue grew at an even more impressive 16% rate. 

Behind the numbers
My nickname for AbbVie's product lineup is "Humira and the Seven Dwarfs." That moniker was certainly applicable to the first quarter.

Humira powered the company's revenue, with sales totaling over $2.2 billion. This reflects a 16% year-over-year increase excluding the impact of foreign exchange. Humira sales in the U.S. grew 23.7%, driven largely by the launch of the drug as a treatment of ulcerative colitis.

AbbVie counts seven other drugs with sales exceeding $100 million during the first quarter. Of these "seven dwarfs," only AndroGel experienced increased sales -- by only 3.4% year over year. The company did see nice growth from lower-selling Creon during the quarter, though. Sales increased by 32.4% to $90 million.

Now that the spinoff and the "spinner," Abbott, have both reported first-quarter results, how did the two compare? AbbVie looks to be the winner.

Abbott had pretty good results. Both companies beat earnings estimates. However, Abbott missed analysts' revenue estimates, while AbbVie topped revenue expectations. Round one to the spinoff.

Looking ahead
The company confirmed previous full-year guidance of $2.66 to $2.76 in diluted earnings per share on a GAAP basis and adjusted earnings of $3.03 to $3.13 per share. Analysts expect adjusted earnings per share of $3.11 for the full year.

Prospects for Humira still look very strong. The recent European rejection of Pfizer's (NYSE: PFE  ) rheumatoid arthritis drug Xeljanz helps improve those prospects. While Pfizer intends to appeal this decision, the absence of Xeljanz in European markets means great news for AbbVie.

However, with AbbVie still depending on Humira for nearly 52% of total revenue, the company definitely needs other strong revenue sources. That will become even more important when Humira goes off-patent in a few years.

The company can't count on AndroGel to help too much. Perrigo (NYSE: PRGO  ) gained approval from the U.S. Food and Drug Administration in February for a generic version of a less concentrated form of the gel in February.

AbbVie does have some good candidates in the pipeline, but it will have to see some staggering successes to make up for eventual revenue declines when Humira loses exclusivity. My view is that the stock should continue to do well throughout 2013 and into the next couple of years. However, the future looks much murkier beyond that point.

In the pharma business, great success comes with a caveat. AbbVie is a perfect example, as investors in the new company are left wondering what the future holds once the company's golden goose, Humira, is cooked. The Fool's brand-new premium report on the company answers the high-profile questions that AbbVie investors are asking. Simply click here now to claim your copy today.

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