Perhaps as much as any industry, pharmaceutical makers must innovate to survive and thrive. That's because the same patents which protect a medicine from biosimilar competition eventually expire, often leading to a precipitous decline in sales.

Consider AbbVie's (ABBV 0.22%) crown jewel drug, Humira, which hauled in $21.2 billion in revenue in 2022. But now that it faces competition from the likes of Amgen's biosimilar Amjevita in the U.S., this should prove to be the medicine's peak sales figure.

The good news is that AbbVie knew this day would come and has been preparing. One of its newer, more promising drugs is Rinvoq. Already approved for six indications in the U.S., the medicine could soon be on its way to the seventh. AbbVie recently enrolled patients in a phase 3 clinical trial for treating moderate to severe cases of systemic lupus erythematosus (SLE), an autoimmune disease.

Let's see what this could all mean for the company's prospects.

Another treatment option for a disruptive condition

SLE is an autoimmune disease that affects multiple organs of the body. The condition triggers the body to attack healthy tissue, such as the kidneys, musculoskeletal system, and skin. This results in symptoms like fatigue, impaired function, and joint pain. 

Approximately half (48.7%) of SLE cases are mild in nature while the other half are moderate to severe. Because the complications of SLE can include kidney failure, stroke, or heart attack, it is critically important that patients and their healthcare providers collaborate to find the best individual treatment for a particular patient. 

One such medicine that could become an option in the near future is Rinvoq. Pleased with the results from its phase 2 clinical trials, AbbVie announced just days ago that it had advanced the drug to phase 3 clinical trials.

Specific data from the clinical trials isn't available yet. But Rinvoq met the primary endpoint of at least a 4-point reduction in the SLE Responder Index (SRI-4). This measure is used to assess the extent to which an SLE patient improves on a particular therapy. For the sake of its clinical trial, AbbVie defined SRI-4 as an at least 4-point reduction on the SLE Disease Activity Index 2000 (SLEDAI-2K) score without worsening of the overall condition or the development of significant disease activity in new organs.

Patients receiving Rinvoq as a therapy achieved SRI-4 at a rate that impressed AbbVie enough to justify moving the project forward. The condition was under adequate enough control in the treatment group that patients were able to receive prednisone doses of less than or equal to 10 milligrams once per day at week 24. This is good news because while first-line treatments like steroids such as prednisone are effective, they are also dangerous at high doses over the long-term. Patients are able to avoid high doses of prednisone while on Rinvoq, which should limit the risk of the most common steroid complication of irreversible organ damage.  

A doctor and patient talk to each other during an appointment.

Image source: Getty Images.

Marginal add-on revenue prospects

As more treatments make their way to the market, the global SLE medicine market is poised to grow from $2 billion in 2021 to $3.5 billion by 2030. Until clear data comes out from the phase 2 clinical trial, I will conservatively assume that Rinvoq can seize 10% of the market. That's because no single treatment will work optimally for every patient. This works out to $350 million in annual revenue. 

Stacked against the $52.7 billion in total revenue that analysts expect AbbVie to record in 2023, this would be a 0.7% bump in its revenue base. With the company aggressively expanding its indications for Rinvoq and Skyrizi, AbbVie expects that the two drugs will bring in $27 billion in combined annual revenue by 2027.

Putting this into perspective, that's almost quadruple the $7.7 billion that the two drugs brought in for the company in 2022. In all, AbbVie has over 90 compounds or indications currently in clinical development to keep the top line moving higher over the long haul. 

Buy the Dividend King at a fair valuation

By way of its prior corporate history as part of Abbott Laboratories, AbbVie has raised its payout for 51 consecutive years. And with the company's dividend payout ratio set to come in at approximately 53% in 2023, future dividend growth could persist. 

Income investors can scoop up AbbVie and its market-doubling dividend yield of 3.8% at a forward price-to-earnings (P/E) ratio of 14.2. This is only slightly above the drug manufacturers industry average of 13.3, which arguably makes the stock a buy