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1 Risk You Must Understand With This Spinoff

By Brian Orelli, PhD - Nov 21, 2012 at 12:00PM

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All Humira, All The Time

With the impending spinoff of its branded-drug business, Abbott Labs ( ABT -0.04% ) is losing a massive blockbuster drug in Humira. It's a confusing event to understand, with many investors left wondering what to do with these two stocks once they're separated. To help investors better understand the upcoming event, I've just released a brand new premium report outlining both Abbott Labs and its spinoff, AbbVie. Below is a short sample of what you can find in the full report.

All Humira, all the time
Without a doubt, AbbVie's biggest blessing is also its biggest risk. Humira has performed beyond expectations over the last few years, but that success has led to a drug that now makes up over two thirds of Abbott's pharmaceutical sales, which will become AbbVie.

As Humira continues to grow and AbbVie loses patent protection on its lipid-lowering drugs TriCor/Trilipix and Niaspan, the fraction of sales coming from Humira will only get larger.

Being so dependent on Humira exposes AbbVie to threats that could cripple it. First and foremost, knockoffs of the drug will come eventually. Being a biologic, it won't see the same kind of instant decline we see with small molecule drugs that go off patent. But given the enormous sales, there's no doubt that multiple companies will be gunning for Humira.

Like any drug, Humira is also exposed to potential competition from new branded drugs that might offer some advantage over the current offerings. Pfizer ( PFE 0.47% ), for instance, gained FDA approval for Xeljanz, an oral rheumatoid arthritis drug. The drug is probably not an immediate threat to Humira since doctors are so comfortable with Humira and the rest of the anti-TNF drugs. But as doctors become more comfortable with Xeljanz and as other oral drugs in the same class are approved, they'll undoubtedly cut into some of Humira's sales.

Know your stock
I hope you enjoyed this preview of our brand new report on Abbott and the future AbbVie. In the full version, I outline all of the must-know opportunities and risks facing both companies, so be sure to claim this 2-for-1 report by clicking here now.


This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Abbott Laboratories Stock Quote
Abbott Laboratories
$132.42 (-0.04%) $0.05
Pfizer Inc. Stock Quote
Pfizer Inc.
$51.72 (0.47%) $0.24

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