Over 60% of AbbVie Inc.’s (NYSE:ABBV) sales come from demand for Humira -- an autoimmune-disease drug prescribed to patients with a variety of conditions -- that racks up sales of $16 billion per year. Humira is also world’s top selling medicine.

AbbVie’s heavy reliance on Humira has investors nervous about what happens when Humira loses its patent protection, but perhaps, those worries are overblown based on what AbbVie’s management is telling investors.

High stakes patent ploy

Humira was discovered by AbbVie in 1996, and its composition of matter patent expired at the end of 2016. The composition of matter patent arguably provided Humira with its best patent protection, but AbbVie believes other patents it’s been granted over the years for manufacturing, method of use, and formulation still give it plenty of patent cover.

A gavel rests on top of a pile of money.

Image source: Getty Images.

Recently, AbbVie told investors it believes its patent strategies will be able to fend off Humira look-a-likes until at least 2022.

Until then, AbbVie expects Humira to become even more deeply entrenched with doctors and patients, making its moat a bit wider and deeper against upstarts. Between price increases and growing prescription volume, AbbVie estimates Humira's annual revenue will increase to $20 billion, making every month added by patent litigation incredibly valuable.

Preparation underway

Regardless of when it loses exclusivity on Humira, AbbVie's not sitting idly by waiting. In hopes of offsetting any future risk to Humira's sales, the company is already investing heavily in acquisitions and research and development.

In 2016, it acquired Pharmacyclics for $21 billion so that it could own 50% of the rights to Imbruvica, a fast-growing drug used to treat patients with chronic lymphocytic leukemia (CLL) and other cancers. Imbruvica’s global sales are already above $2 billion, and a new approval of its use in graft versus host disease should send its sales even higher in the coming year.

In addition to Imbruvica, AbbVie's Empliciti, a multiple myeloma drug, won FDA approval in 2015, and Venclexta, a CLL drug, won approval in 2016. The company's R&D pipeline includes over a dozen cancer drugs in clinical-stage development, including Rova-T, a solid tumor drug it acquired for more than $5 billion in 2016.

The R&D team is also developing successors to protect Humira's market share. Late-stage studies are in progress for upadacitinib, a potential treatment for rheumatoid arthritis, Crohn’s disease, and ulcerative colitis, as well as the drug risankizumab -- a possible treatment for multiple inflammatory disease indications. AbbVie thinks these two drugs could become top sellers with combined peak sales of $5 billion per year someday.

Also, AbbVie’s developed a next-generation hepatitis C drug that can cure the disease in as little as eight weeks, and that will compete for billions of dollars per year in sales after winning FDA approval this summer. Its pipeline also includes drugs targeting endometriosis, Alzheimer’s disease, and Parkinson’s disease.

Eyes on the future

If AbbVie is to fully offset any future threat to Humira's sales by biosimilars, it's going to need to achieve a much better clinical-trial win rate than the industry has had in the past. Historically, only about one in 10 drugs entering clinical trials successfully have made it to market. 

The pressure for AbbVie's strategy to succeed is increased even further by the fact that the FDA has already approved two Humira biosimilars. For now, their launches are being delayed by AbbVie’s legal strategy, but with other FDA approvals likely, there's bound to be a slate of biosimilars waiting at the gate for Humira’s patent protection to finally end -- and that's something AbbVie won't be able to avoid forever.