AbbVie (ABBV 1.01%) boasts a portfolio of drugs across immunology, neuroscience, aesthetics, oncology, and eye care. Yet investors' focus lately has been on the fate of one particular product: the immunology drug Humira. That's because it's set to face competition in the U.S. as of this month.
Why is this such a problem? It's because Humira has become a megablockbuster. In 2021, the product brought in more than $20 billion in sales. And over its two decades on the market, Humira has generated almost $200 billion in sales, according to BioPharma Dive.
But I think investors shouldn't worry too much about the upcoming loss of exclusivity. Here's why.
The world's top-selling drug
First, let's take a look at the bad news. Humira is the world's top-selling drug -- but that may not be the case for long. A loss of patent protection means that biosimilars may enter the market. And a number of candidates are set to do just that in 2023.
This has already been happening internationally, and it's weighed on Humira's sales outside of the U.S. For example, in the third quarter, Humira's international sales fell by more than 25%. Humira is approved for a broad range of indications across rheumatology, dermatology, and gastroenterology. These include conditions like rheumatoid arthritis, plaque psoriasis, and Crohn's disease.
Now, let's get to the good news. AbbVie, of course, has seen this day coming for a long while, and the pharmaceutical giant has been taking action. That action is prepping two other immunology drugs not only to compensate for Humira -- but eventually to surpass it.
Enter Rinvoq and Skyrizi. Today, the U.S. Food and Drug Administration (FDA) has approved Rinvoq for five indications and Skyrizi for three; most of these are Humira indications. The FDA currently is reviewing Rinvoq for Crohn's disease as well.
AbbVie continues to study Rinvoq in five additional indications. And the company is testing Skyrizi in a phase 3 trial for ulcerative colitis.
NYSE: ABBV
Key Data Points
Already in blockbuster territory
These immunology treatments have been proving they have the potential to take over where Humira left off. In the third quarter, Skyrizi revenue soared 75% and Rinvoq revenue advanced more than 50%. And in the first nine months of the year, they each brought in well over $1 billion, so these products have already made it into blockbuster territory.
But this is just the beginning: AbbVie predicts Rinvoq and Skyrizi together will generate more than $17.5 billion in revenue in 2025. And by 2027, the company expects these products, combined, to bring in more than $21 billion. At that point, they will have surpassed Humira.
Meanwhile, investors may have to be patient for a couple of years. AbbVie predicts a return to strong top-line growth in 2025. Before that, as Humira rivals enter the market, we're likely to see the impact on AbbVie's earnings.
Should you buy AbbVie now?
The question is this: Should you buy AbbVie stock now, or wait until the newer immunology drugs truly start compensating for the Humira loss?
There are a few things to consider. First, though Humira is a big product, it's not AbbVie's only drug. The company sells dozens of other products across various treatment areas -- including well-known aesthetics product Botox and bipolar disorder drug Vraylar. Growth in sales of these and other drugs could lead AbbVie's shares higher. Second, it's impossible to time the market, so the best time to buy stock is when the company's valuation looks reasonable considering its prospects.
Today, AbbVie shares trade for 12 times forward earnings estimates. That's reasonable considering the company's long-term earnings prospects -- and here, I've only spoken about the immunology business. By 2026, AbbVie is forecast to be the world's top pharma company by prescription-drug market share, according to data from Evaluate Pharma.
For the long-term investor, right now looks like a great time to get in on this pharmaceutical company -- and benefit from a whole new era of growth in the coming years.
