AbbVie Inc. (NYSE:ABBV) makes a lot of money. In 2016, the big biotech generated revenue totaling $25.6 billion. That's a big jump from the $18.8 billion that AbbVie made in 2013, its first year as a standalone company after being spun off by Abbott Laboratories (NYSE:ABT).
But for investors, one key question has to be, exactly how does AbbVie make most of that money? Let's dig into the answer for the present, and look at how things could change in the future.
Where AbbVie makes its money now
The primary source for AbbVie's revenue now is the same as it was when the company was spun off from Abbott: Humira. Not only is Humira the top-selling drug for AbbVie, it's also the top-selling drug in the world. How dependent is AbbVie on Humira? The following chart tells the story.
Humira generates roughly 63% of AbbVie's total revenue. The company's No. 2 product, cancer drug Imbruvica, comes in a distant second, contributing 8% of total revenue. Hepatitis C virus (HCV) drug Viekira ranks third, kicking in 4% of AbbVie's revenue.
After these three drugs, AbbVie has several other products that make significant revenue. At the top of the list is Lupron, which generated sales of $821 million last year. The drug is approved for treating prostate cancer, endometriosis, fibroids, and central precocious puberty.
The other way of looking at where AbbVie currently makes its money is by geographical region. AbbVie provides market details only on its drugs listed by name, so the following chart does not include revenue generated by products in the "all other" category.
On an overall basis, AbbVie is heavily dependent on the U.S. market for its revenue. However, it can be a different story depending on individual products. For example, nearly 78% of Viekira sales are made in international markets. All of AbbVie's sales for Synagis, a drug prescribed to help protect children from respiratory syncytial virus (RSV), are in international markets.
A look at AbbVie's potential future
How AbbVie makes money will change dramatically over the next few years. AbbVie thinks that it can hold off biosimilar rivals to Humira in the U.S. through 2022 by asserting its intellectual property rights for the drug. However, Humira will inevitably face competition from biosimilars at some point, which will lead to a significant decrease in sales.
Expect sales for Imbruvica to climb, though. AbbVie has projected that it will make $7 billion in peak annual sales from the cancer drug -- and that doesn't include the revenue that Johnson & Johnson will make from it. Whether or not this lofty goal can be attained will depend in large part on how well several phase 2 and phase 3 clinical studies targeting additional indications go.
At one point, AbbVie predicted sales for Viekira could reach $3 billion. However, HCV patient starts have dropped significantly thanks to several drugs coming on the market that cure hepatitis C. As a result, AbbVie can't depend on Viekira to significantly offset a potential drop in Humira's sales down the road, although the biotech's next-generation HCV treatment could help. The other drugs in AbbVie's current lineup aren't likely to grow sales enough to make a big difference for AbbVie, however.
The good news for AbbVie, though, is that it has several promising pipeline candidates with blockbuster potential. Below is a table showing several of these candidates with peak sales projections.
|Pipeline candidate||Targeted indication(s)||Projected peak sales|
|Rova-T||small cell lung cancer||$5 billion|
chronic lymphocytic leukemia, multiple myeloma, acute myeloid leukemia, follicular lymphoma, diffuse large b-cell lymphoma
|Upadacitinib (ABT-494)||rheumatoid arthritis||$3.5 billion|
|Elagolix||endometriosis, uterine fibroids||$2 billion|
While Humira should continue to be a primary source of revenue for AbbVie for years to come, Imbruvica and other drugs likely on the way should become much more important to the company in the future.