Why Abbvie Might Be Poised for a Return to Profitability

In this clip from "The Pharma & Biotech Show" on Motley Fool Live, recorded on Feb. 2, Motley Fool contributors Keith Speights and Brian Orelli assess the pharma giant's projection that it'll return to growth quickly in the second half of the decade.

Keith Speights: Here's the statement that really jumped out to me, Brian. I'm going to read this, "AbbVie (ABBV 1.26%) confirmed prior revenue guidance of greater than $15 billion in combined Skyrizi and Rinvoq risk-adjusted sales in 2025. AbbVie expects each asset to deliver risk-adjusted sales of greater than $7.5 billion in 2025."

Brian Orelli: It's not $20 billion, but it's a nice chunk of change.

Speights: You know what's especially striking about that? AbbVie is sticking with its projection even though the FDA has slapped down on JAK inhibitors, so Rinvoq's impacted by that.

Orelli: It's a little surprising.

Speights: They could be wrong. [laughs]

Orelli: In cancer, if you were the last line of defense, you have pretty low sales because a lot of people are going to die on the first, second, third line of treatment. But people with Rheumatoid Arthritis or Atopic Dermatitis, all of those autoinflammatory diseases that they're treating, those people aren't going to die of those diseases. They're more likely to work through each one of the drugs, and as they fail on one drug, they are going to try a new drug. Maybe that's the idea here. Some are just going to get helped by the one drug and they're going to stay on it possibly forever, for the rest of their life. But, some people are going to fail that drug and then they are going to move, so maybe that's what they're planning on expecting to get is the tail end. Even if they are the last line of defense, there's still a lot of patients who still need that treatment, and so their doctors are going to try that versus putting them on nothing.

Speights: I was noticing, even though Humira faces intense bio-similar competition internationally, the drug still pulled in nearly $3.4 billion in international markets last year. AbbVie is still making a lot of money internationally from Humira. I would expect that, even when it starts facing bio-similars in the U.S. market next year, these sales aren't going to evaporate. As Skyrizi and Rinvoq pick up steam, Humira starts declining. If AbbVie's correct and it's two newer autoimmune disease drugs break in over $15 billion by 2025, and Humira goes on a steady decline over the next few years in the U.S. market, I think AbbVie could be right that they return to growth pretty quickly in the second half of this decade.

Orelli: I think we will have to decide. I think a lot is going to be determined outside of their control. It's going to be determined by the number of Humira bio-similars that get approved. I think there's a lot of companies going after the bio-similar for Humira because it's such a large market. Therefore, once you get to a certain number of companies, now they have to start lowering, at least in the generic market. I don't think we've really experienced this idea in the U.S. bio-similar market, but in the generic market, which is small molecule, copycat drugs. If you have one or two manufacturers, they tend to price a lot higher and a lot closer to the branded price because there's no competition among them and they're only really competing against the branded drug where when you get into the five, six, seven number of generic makers, now the drugs get really cheap. So cheap that oftentimes the cash price of a drug is actually cheaper than the co-pay because your pharmacy can buy it so cheaply. The pharmacy can buy it so because there's so many other companies making the drug that they have to price it cheaply to be competitive. I think a lot of this is going to depend on how many of the companies get bio-similar approvals. That's going to determine how quickly that Humira-branded drug declines.