AbbVie Inc. (ABBV 0.25%) investors are being rewarded with an industry-leading dividend yield of 4.5%. However, patent threats to its best-selling medicine, Humira, make investing in this dividend-paying healthcare giant a bit of a gamble. Can AbbVie thwart its patent risk, or will the company take a big hit?

Image source: AbbVie Inc.

What's at stake

AbbVie's Humira is the world's best-selling medicine. It's an autoimmune disease drug that costs tens of thousands of dollars per year and that's used to treat patients with a range of diseases, including the blockbuster rheumatoid arthritis and psoriasis indications.

In 2015, widespread global use resulted in Humira sales in excess of $14 billion, and in Q3, Humira's sales were running at an annualized $16 billion pace. Overall, Humira is solely responsible for 63% of AbbVie's total revenue, and that's potentially bad news, given that a key Humira patent expires in December.

Ducking and moving

In order to avoid a big blow to its top and bottom line, AbbVie is attempting to block the entry of drugs that work similarly to Humira.

The company has a slate of method-of-use patents remaining on Humira that it believes can stave off Humira biosimilars for a few more years. Investors had better hope management is right, because the FDA already approved one Humira biosimilar in September, and that drug, Amjevita, is made by Amgen (AMGN -0.50%), a deep-pocketed foe.

In August, AbbVie filed a patent infringement suit against Amgen that, if successful, could delay Amjevita by three years. AbbVie asserts that Amjevita violates 20 of its Humira patents, and that it violates the rules of the Biologics Price Competition and Innovation Act.

AbbVie's legal wrangling appears to have already paid off, because earlier this week, Amgen confirmed to investors on its third-quarter earnings conference call that Amjevita's launch will be delayed at least through 2017.

That's good news for AbbVie because it buys management time to acquire or develop additional drugs that can offset any sales that eventually get lost to a biosimilar competitor.

Image source: AbbVie Inc.

Last year, AbbVie made a $21 billion leap toward that goal with the acquisition of Pharmacyclics. That deal landed AbbVie Imbruvica, a fast-growing therapy that's increasingly being used to treat lymphoma and leukemia patients. AbbVie splits Imbruvica profit with Johnson & Johnson, and in Q3, AbbVie reported Imbruvica's sales increased 64.5% year over year, to $501 million.

AbbVie also hopes it can generate solid sales from Venclexta, its recently approved therapy for chronic lymphocytic leukemia patients with an amenable genetic makeup. Venclexta won accelerated FDA approval earlier this year, and it's being co-marketed by Roche's Genentech. A European approval could be in the cards soon.

Sales may also benefit from the FDA's approval of Zinbryta this year. Zinbryta is a once-monthly treatment for multiple sclerosis (MS) that was co-developed by MS powerhouse Biogen. A black-box warning, the strictest warning put on drug labels by the FDA, on Zinbryta's label may mean that it's relegated to niche use. However, sales could still be meaningful given that the MS market is worth $19 billion annually.

Additionally, AbbVie is working on new hepatitis C drugs that could reinvigorate its market share in the indication. AbbVie launched Viekira Pak, a multidrug combination therapy for hepatitis C in 2015, and while sales exceeded $1.6 billion in 2015, U.S. sales have trailed off this year. In Q3, Viekira Pak's U.S. sales declined 69%, to $76 million, from last year, and as a result, global Viekira Pak sales slipped to $378 million in the quarter. The company's management expects to file for FDA approval of a next-generation, pan-genotype hepatitis C drug soon.

A bit further down AbbVie's R&D pipeline is Rova-T, an antitumor drug acquired earlier this year in a $5.8 billion deal. Rova-T binds to a protein, known as DLL3, expressed on tumor cells, in order to deliver an anticancer payload. So far, results are encouraging. In a small early-stage study involving patients with small-cell lung cancer, 40% of high-expressing DLL patients responded to the drug and 89% of those patients had stable disease.

A quarterly payday

Humira's patent situation raises questions that investors shouldn't ignore, but it's hard to argue that AbbVie's dividend isn't enticing or that the company isn't working hard to sidestep the patent threat. AbbVie's dividend payout has grown 60% since it was spun off from Abbott Labs in 2013, and last month, management announced a 12% increase in its dividend, to $0.64 per share, per quarter, next year.

Nevertheless, a compelling dividend payout has to be taken in the context of Humira's patent risk. AbbVie has some very intriguing drugs that could insulate sales against a Humira sales drop, but that's far from a given, and for that reason, I think this company is better-suited to risk-oriented growth investors than it is to traditional dividend-hunting, long-term income investors.