AbbVie's (ABBV 0.01%) fortunes have hinged primarily on autoimmune-disease drug Humira for years. That's understandable, considering that Humira has ranked as the world's bestselling drug for nearly a decade.

However, Humira faces biosimilar rivals in the U.S. beginning in 2023. Many investors could be concerned about AbbVie's future as sales for its top blockbuster inevitably decline. But AbbVie is a better stock than you might think.

A scientist in lab writing on a notepad while standing in front of a microscope.

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Humira's death has been greatly exaggerated

Yes, AbbVie will soon face a challenge from Humira biosimilars in the U.S. market. But no, Humira's sales won't evaporate next year. Actually, the drug is likely to remain a megablockbuster for quite a while.

We can look to AbbVie's experience with Humira biosimilars in international markets as a guide for what to expect going forward. International sales for the autoimmune-disease drug peaked in 2018 at nearly $6.3 billion, with biosimilars hitting the European market near the end of the year.

What happened in 2019? International sales for Humira plunged 31%. However, the drug still raked in $4.3 billion outside of the U.S. And last year, Humira generated nearly $3.4 billion internationally -- around 54% of peak ex-U.S. sales.

Let's assume that Humira's U.S. sales drop by 50% in 2023. Even in this much worse scenario than what happened with international biosimilar competition, the drug would still make close to $8.7 billion in U.S. sales. 

Look out for "Humira 2.0"

The prospects of AbbVie losing a huge chunk of revenue won't give investors a warm-and-fuzzy feeling. However, the company probably won't suffer nearly as much as you might expect.

One big reason why is that AbbVie has a "Humira 2.0" of sorts with its two successors to Humira -- Rinvoq and Skyrizi. Sales of the two drugs combined totaled nearly $4.6 billion in 2021. AbbVie projects combined global sales of $15 billion in 2025. The net increase could be enough to offset sales declines for Humira without any additional help. 

It's important to note that AbbVie's estimate is risk adjusted. The company isn't betting that everything goes right with clinical testing and regulatory approvals. 

The future beyond 2025 looks even brighter. AbbVie CEO Rick Gonzalez said in the company's recent fourth-quarter conference call, "We expect combined peak sales for Skyrizi and Rinvoq to exceed the peak revenues achieved by Humira."

Don't underestimate the power of a juicy dividend

AbbVie's dividend has been a big plus for the stock throughout the years. The company ranks as a Dividend Aristocrat. Its dividend yield currently stands at a little under 4%.

Don't underestimate the power of a juicy dividend. For example, take a look at just how much AbbVie's dividend has helped boost its total return since the company was spun off from Abbott in 2013.

ABBV Chart

ABBV data by YCharts.

The numbers don't lie. Nearly 40% of AbbVie's total return has stemmed from its dividend. And while AbbVie's stock performance outperformed the S&P 500 during this period, its total return including dividends absolutely trounced the major index. 

Expect AbbVie's dividend to continue playing a key role in total returns in the future. CFO Rob Michael noted in the company's Q4 call that its "cash flow will fully support a strong and growing dividend."

Room to run

Perhaps the most important thing for investors to understand is that the anticipated sales declines for Humira are fully priced into AbbVie's share price. The big-pharma stock trades at a little over 10x expected earnings. That's roughly half of the S&P 500's forward earnings multiple. Keep in mind that AbbVie's valuation remains attractive after soaring 38% over the past 12 months.

Wall Street doesn't seem to think that AbbVie will continue this momentum. The consensus price target reflects an upside of only around 2%. I think that the analysts -- and many investors -- aren't giving AbbVie enough credit.

The company is well prepared for the long-anticipated sunset years for Humira. In addition to Rinvoq and Skyrizi, AbbVie's current lineup includes several other growth drivers such as blood cancer drug Venclexta and antipsychotic drug Vraylar. The company also has a broad pipeline.

AbbVie expects to quickly return to growth in 2024 after a temporary trough year in 2023 due to Humira's loss of exclusivity. The company looks for strong revenue growth throughout the rest of the decade. This stock should have plenty of room to run, especially considering its bargain valuation and top-tier dividend.