Why AbbVie's First Year on Its Own Was a Success

It's been an encouraging first year as an independent company for AbbVie (NYSE: ABBV  ) (since its split from Abbott Laboratories (NYSE: ABT  ) ), with full-year results highlighting a positive 2013 and providing an update on what could be an upbeat 2014, too.

Indeed, shares reacted positively to the release and posted gains of more than 3% following the update. As with many health-care stocks, AbbVie hasn't escaped the decline in the wider market, although its shares have picked up in the past few trading sessions to hit $48.90 and deliver gains of 35% over the past year.

In terms of figures for the year, AbbVie reported full-year adjusted earnings per share of $3.14, with fourth-quarter revenue being $5.1 billion. Although revenue numbers were down 1.8% versus the prior quarter, when unfavorable exchange-rate fluctuations are excluded and sales from the lipid franchise are also excluded (because of the loss of exclusivity), sales increased by just under 8% in the quarter.

These figures were boosted by the continued strength of HUMIRA, with global HUMIRA sales increasing by 13.4% and U.S. HUMIRA sales growing by just over 18%. Meanwhile, research and development spend continues to be generous at 15.6% of sales in the fourth quarter, with AbbVie continuing to invest in its mid- and late-stage pipeline assets as well as the continued pursuit of additional HUMIRA indications.

On this topic, AbbVie announced the completion of its phase 3 hepatitis C virus, or HCV, studies on the day of its results release. The news was positive, with patients enrolled in the trials sustaining relatively high responses to treatments.

In addition, AbbVie also announced positive top-line phase 3 HCV results from the SAPPHIRE-I and SAPPHIRE-II studies during the quarter, which examined AbbVie's HCV regimen in naive and treatment-experienced patients. Results showed that treatment with AbbVie's 3-DAA therapy plus ribavirin produced high SVR rates of 96%, while the regimen was also well tolerated by patients receiving the combination.

Furthermore, AbbVie announced during the quarter the initiation of two further phase 3 trials, which highlights the potential the company has in its mid and late-stage pipeline assets, again confirming why research and development spend is crucial to the continued success of the company.

As mentioned, the loss of exclusivity on the lipid franchise swung fourth-quarter revenues from a gain to a loss. However, loss of exclusivity has hit many of AbbVie's sector peers much harder, with Eli Lilly (NYSE: LLY  ) , for instance, reporting a 12% decline in fourth-quarter net profit.

This was largely due to Eli Lilly's loss of patent protection for its biggest product, the antidepressant Cymbalta. Furthermore, Eli Lilly is set to lose patent protection on Evista (a bone-building drug) as soon as next month, although (as with AbbVie) it has a relatively strong pipeline and submitted four new drugs for regulatory review in the most recent quarter.

In addition, sector peer Merck (NYSE: MRK  ) saw EPS fall by more than 13% in the fourth quarter of 2013 as the challenge from generic drugs was maintained. For example, sales of Singulair fell by 38% when compared with the fourth quarter of 2012. However, Merck continues to invest in its pipeline and is anticipating regulatory actions for multiple drugs in 2014, including Noxafil IV and Vintafolide in the European Union.

So, while generic competition did swing AbbVie's fourth-quarter revenue from a gain to a loss, it didn't make as severe an impact as it did with sector peers Merck and Eli Lilly. Indeed, the first full year as an independent company has been a relatively successful one for AbbVie, and with multiple mid- to late-stage assets in its pipeline, 2014 could prove to be a second successful year since its split from Abbott Laboratories.

The Motley Fool's top stock for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2831439, ~/Articles/ArticleHandler.aspx, 8/28/2014 1:16:02 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 4 hours ago Sponsored by:
DOW 17,122.01 15.31 0.09%
S&P 500 2,000.12 0.10 0.00%
NASD 4,569.62 -1.02 -0.02%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

8/27/2014 4:00 PM
ABBV $55.70 Down -0.05 -0.09%
AbbVie Inc. CAPS Rating: *****
ABT $42.60 Down -0.20 -0.47%
Abbott Laboratorie… CAPS Rating: *****
LLY $63.00 Up +0.19 +0.30%
Eli Lilly & Co. CAPS Rating: ****
MRK $60.28 Up +0.08 +0.13%
Merck & Co., Inc. CAPS Rating: ***

Advertisement