AbbVie (ABBV 0.31%) has delivered excellent returns over the past decade. It experienced a slight slowdown in recent years as it navigated the loss of patent exclusivity for its former best-selling medicine, Humira. Now that this patent cliff is in the rearview mirror, though, AbbVie's outlook for the next five years looks bright. Could investing in the pharmaceutical giant pay off over the next five years? I think so, and here is why.
Two high-flying growth drivers
AbbVie has a strong lineup of medicines spanning several therapeutic areas. Many contribute meaningfully to top-line growth, but none is more important than the two immunology products, Skyrizi and Rinvoq. Between them, they are approved across a range of indications, including eczema, rheumatoid arthritis, ulcerative colitis, plaque psoriasis, and more. Skyrizi and Rinvoq have surprised even the company itself.
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For several years, management projected combined sales of $27 billion by 2027, but then increased that guidance by $4 billion. What's more, Skyrizi and Rinvoq won't encounter a patent cliff anytime soon, at least not in the next five years. So, they should continue to be terrific growth drivers through 2031 (and beyond).
No major loss of patent exclusivity
Although AbbVie has demonstrated its ability to navigate major patent cliffs, no drugmaker looks forward to them. The good news is that through the end of this decade, AbbVie won't encounter another major loss of patent exclusivity.
NYSE: ABBV
Key Data Points
That's significant. It means that the company's revenue and earnings should increase uninterrupted at least until 2030. But there is another important implication to consider. AbbVie has plenty of time to prepare for its next patent cliff and should succeed in developing new products to circumvent it, whenever it arrives. The company has been working hard on this project. It has made some acquisitions and licensing deals in recent years.
Meanwhile, its pipeline boasts several dozen ongoing programs, including some brand-new compounds in development. Clinical progress will be important for AbbVie over the next five years.
A fantastic dividend stock
AbbVie's dividend program makes the stock even more attractive. The company is a Dividend King, meaning it's a corporation with 50 years (or more) of consecutive dividend increases under its belt. Opting for dividend reinvestment would be a great way to boost returns. It may not make a significant difference over a year, but over half a decade, it does. Here's the proof.
AbbVie's total returns (including dividends reinvested) are meaningfully higher than its stock price appreciation over the past five years. The same should happen through 2031 as AbbVie continues to hike its payouts. That's another reason why investing in the stock should pay off over the next five years.
