When investing in your own future, knowing what to expect from different types of businesses you can invest in is a great way to get a leg up. Of course, knowing what to expect isn't always as straightforward as it could be. Take the case of AbbVie (ABBV 0.25%) and Moderna (MRNA -1.39%). They're both commercial-stage drugmakers but their potential growth trajectories could hardly be more different.
Given enough time, both of these pharma stocks can double their shareholders' original investment. But which one is likely to get there first? Here's what every investor should know about the paths ahead of these drugmakers.
AbbVie's next steps
AbbVie spun off from Abbott Laboratories in 2013 to shield the parent company from an impending loss-of-exclusivity disaster. International sales of AbbVie's lead drug, an anti-inflammation injection called Humira, tanked a few years ago when biosimilar competition became available in the EU.
U.S. sales of Humira grew to $8.7 billion in the first half of 2022 compared to international sales, which declined to $1.4 billion. Multiple biosimilar versions of Humira will launch in the U.S. next year, so we can expect several billion less in revenue from the company's lead drug in the near term.
AbbVie could still deliver a tenfold gain to patient investors because it has deftly invested a portion of Humira's profits into new drugs with rapidly growing sales. Rinvoq for arthritis and Skyrizi for psoriasis both launched in 2019 and they're already blockbuster drugs, generating a combined $7.4 billion in sales annually. Management expects the combined sales of Rinvoq and Skyrizi to exceed $15 billion in 2025.
In 2020, AbbVie spent $63 billion to acquire Allergan and the Botox brand of botulinum toxin. Botox isn't the only botulinum toxin injection available; it's such a strong brand, though, that cosmetic Botox sales soared 18.9% year over year in the second quarter to an annualized $2.8 billion. Therapeutic-use Botox sales also rose to an annualized $2.7 billion.
AbbVie will struggle to grow over the next couple of years as biosimilar competition tears a chunk out of U.S. Humira sales. Its growth over time will also be somewhat limited by a dividend program that currently offers a 3.9% yield. Put it together and you're looking at well over a decade to deliver a tenfold gain.
Moderna's many paths forward
While AbbVie markets dozens of drugs, Moderna has just one. Moderna's COVID-19 vaccine, Spikevax, is a mega-blockbuster with $10.5 billion in sales during the first half of 2022.
Sales of Spikevax contracted in the second quarter now that nearly everyone who wants a vaccine shot has already had theirs. A new booster that targets the omicron variant earned Emergency Use Authorization from the FDA in August. As one of just two boosters that target prevailing strains of the virus responsible for COVID-19, sales could stabilize in the last half of 2022.
From here on out, we'll probably see Moderna regularly launch new boosters that address prevailing strains of the virus responsible for COVID-19 the same way that we see other vaccine manufacturers update their annual flu shots. With somewhat stable cash flows from its COVID-19 vaccine, potential new products could really drive growth.
In September, Moderna boasted of 24 new drug candidates in clinical-stage trials. Four of these programs are already in phase 3 trials. Three years ago, Moderna had just eight programs in clinical-stage testing and nothing in phase 3. Two of Moderna's late-stage candidates are aimed at infectious diseases that lack effective vaccines.
Image source: Getty Images.
A better buy now?
At recent prices, Moderna's a mid-sized pharma company with a market cap of around $54 billion. That's less than one-fourth of AbbVie's market value at the moment. A lower starting point alone gives Moderna a much better chance to double before AbbVie.
If half the vaccines Moderna has in late-stage testing continue to succeed, the company will effectively triple the number of products it markets by the end of 2024. That said, there are no guarantees that Moderna's vaccine candidates will hit high marks. Clinical trial failures could still hammer this stock and make a 100% gain impossible to realize.
While Moderna is more likely to double your money over the next several years, you have a better chance of receiving a positive return from AbbVie. The company has already launched drugs capable of offsetting Humira's impending losses. Plus, you get to keep AbbVie's quarterly dividend payments regardless of what happens to its development pipeline.
