What happened
Shares of pharma giant AbbVie (ABBV +1.67%) dipped by 3.96% over the course of 2019, according to data from S&P Global Market Intelligence. The drugmaker's stock slipped last year for two fundamental reasons:
- International sales of AbbVie's flagship arthritis medicine, Humira, dropped markedly in 2019 due to the launch of biosimilars in key territories.
- AbbVie's decision to offset Humira's fading star by merging with Botox maker Allergan (AGN +0.00%) later in the year wasn't exactly a big hit with investors for a number of reasons.
So what
Prior to 2019, AbbVie's shares had appreciated by a whopping 163% since the company's debut as an independent entity in 2013, making it one of the best-performing large-cap pharma stocks over this period. The company's early success, however, was due in large part to Humira's skyrocketing sales.
Image source: Getty Images.
Unfortunately, AbbVie wasn't able to significantly diversify its revenue stream ahead of Humira's date with the patent cliff -- despite the company's ultra-aggressive approach to business development. So, given that Humira has consistently made up around 60% of the company's annual sales, it's not altogether surprising that investors shied away from this biopharma stock last year.
Now what
The good news is that this Allergan tie-up will immediately dilute Humira's overall importance as a source of top-line growth. Moreover, AbbVie also got the green light from the Food and Drug Administration for two new immunology meds -- Skyrizi and Rinvoq -- last year. These two drugs are widely expected to become blockbuster-level products in short order, which should help the company smoothly transition into the next stage of its life cycle.
