AbbVie (ABBV 0.98%) investors might have a reason to start sweating. After a somewhat weak first quarter, the biopharma company's near future looks like it'll be one with a bit less revenue than expected.
That's something that would always be a problem, but in this case, the issue is a bit more pressing than usual. Before its Q1 earnings report released in late April, management's forecasts already called for a drop in sales. Now, its plans to reverse the negative revenue trend look like they'll need to start working sooner than anticipated.
Let's take a look at two numbers which show why that's the case.
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1. Humira sales are receding quickly
The first number that shareholders need to pay attention to is sales of rheumatoid arthritis drug Humira, which totaled more than $4.7 billion in Q1, a fall of 2.7% on a reported basis. A drop of some kind is entirely expected as the drug's exclusivity protections are lapsing in several global markets, thereby opening the door for its market share to get eaten by biosimilar drugs. And next year, the exclusivity protections in the U.S. will also expire, leading to a swarm of copycat drugs hitting the market.
In fact, management even has a grand strategy to deal with the problem: It plans to replace income from Humira with revenue from Skyrizi and Rinvoq, two of its other immunology drugs. Though their indications don't overlap with each other or Humira completely, Skyrizi and Rinvoq are indicated for some of the same conditions as Humira, such as arthritis and ankylosing spondylitis. That means that the pair will, in theory, be able to contest the markets that Humira is getting boxed out of by biosimilars, thereby maintaining AbbVie's base of revenue despite the fall of its biggest single-earning product. For reference, Rinvoq made $465 million in the quarter while Skyrizi was responsible for $940 million in sales.
The trouble is that it'll take a few years for the replacement income to ramp up to reach anywhere near Humira at its peak; the drug brought in $20.7 billion in 2021. Therefore, Humira's faster-than-anticipated market share erosion in Q1 is a bit of a problem for the medium term. For now, the damage is largely confined to the drug's share of international markets, where it made $743 million, or 22.6% less net revenue than in the first quarter of 2021. And regardless of the contraction, overall revenue from its immunology portfolio is up by 6.9%, which includes Humira, Skyrizi, and Rinvoq.
Nonetheless, if revenue from Humira sales in the U.S. start to ramp down as quickly as it did internationally, it could cause some more turbulence for shareholders. The same is true for a slower-than-anticipated ramping up of income from the pair of replacements.
2. Imbruvica is underperforming
The other number that could be problematic for AbbVie is $1.1 billion, which is the revenue generated by sales of Imbruvica, its therapy for lymphoma. That sum was 7.4% lower on a reported basis than the drug's sales in the prior year, which is quite troublesome. The culprit here is likely good old-fashioned competition rather than a loss of exclusivity to sell the drug.
Imbruvica treats a handful of different lymphomas, but it does so with significant, burdensome side effects that can be dangerous for patients. Newer medicines like AstraZeneca's Calquence and BeiGene's Brukinsa use the same biological mechanism as Imbruvica, but they're typically easier to tolerate. That makes it less likely for oncologists to prescribe Imbruvica, which in turn depresses sales.
Though Imbruvica makes up only a small portion of AbbVie's $56.7 billion in trailing 12-month revenue, it's unlikely to regain any market share against its competitors, and it's unclear whether its share will continue to erode at a relatively rapid pace. If it does, it'll make maintaining the company's top line in the face of losing Humira all the more difficult, and shareholders might be at risk.
