AbbVie (ABBV 0.94%) is on its way to becoming a pharmaceutical giant. It's set to hold the biggest share of the prescription drug market by 2026, according to Evaluate Pharma. It's in the No. 7 position today, so the company would be making quite a jump.
At the same time, AbbVie is about to lose patent protection of its blockbuster immunology drug Humira. Considering all of this, should we bullish or bearish on the stock? Motley Fool contributors Adria Cimino and Keith Speights present both sides of the argument.
The bull position: Growth is far from over
Adria Cimino: AbbVie's immunology portfolio is going strong, even with the Humira patent expiration on the horizon. The company says the combined peak sales of immunology drugs Rinvoq and Skyrizi will surpass Humira's peak sales. That's as the company gains approval for those drugs in all of Humira's indications. So the future of this portfolio looks bright.
The pharmaceutical company also is scoring wins with its neuroscience and aesthetics portfolios. In the most recent quarter, neuroscience sales climbed 19% to nearly $1.5 billion. Two of its biggest drugs there are Vraylar for bipolar disorder and Botox therapeutic used for problems such as chronic migraine. Revenue for each of those products gained in the double digits.
Botox also climbed in the double digits in the company's aesthetics portfolio. There, it's used as an anti-wrinkle treatment. And overall, aesthetics revenue increased 20% in the quarter to more than $1.3 billion.
AbbVie shares have gained about 12% so far this year, beating the bear market. But considering the strength of the immunology, neuroscience, and aesthetics businesses, today's price still looks reasonable. The shares trade at 21 times trailing-12-month earnings. That's down from more than 40 last year.
Bear case: There are better opportunities to be found
Keith Speights: I've owned shares of AbbVie for years. It's been a solid winner for me, handily beating the market. So why would I make a bear case against the stock? It's simple: Growth investors can find better opportunities -- especially right now.
As a case in point, Warren Buffett has led Berkshire Hathaway to completely exit its position in AbbVie. The legendary investor has, however, bought positions in other publicly traded companies. Buffett found better opportunities for Berkshire.
AbbVie probably will continue to deliver solid growth even after Humira loses U.S. exclusivity next year. But that growth is less assured than that of many other companies because it depends largely on newer drugs capturing market share and pipeline candidates winning approvals. Neither is guaranteed.
Even AbbVie's strong performance in 2021 and so far this year work against it, to some extent. When the stock market rebounds (and it will absolutely do so, sooner or later), lots of stocks that have been beaten down will almost certainly skyrocket a lot more than AbbVie will.
Sure, AbbVie remains an exceptional pick for income-seeking investors with its attractive dividend. For investors looking for growth, though, there are plenty of other better picks.
Bull or bear?
Both views are valid. AbbVie might offer investors less upside than other stocks as the market rebounds. There are many interesting and inexpensive opportunities out there right now.
Still, AbbVie isn't losing everything with the decline in Humira revenue. Some of its other products -- and possibly future products -- should make it a solid stock to own well into the future.