Brenton: Hi Fools, Brenton Flynn here with David Williamson and Max Macaluso, two of our health care analysts here at The Motley Fool.

Guys, we're talking stocks all day; that's part of our job. It's one of the great things about our jobs, but a lot of that happens at our desks, and I think there's a lot of value in debate and discussion of some of the things that don't make it onto these videos typically, so that's why we've gotten around. We're just going to start discussing some high-profile topics in our industry. 

Today we're talking about overhanging risk. We already talked about some biotech stocks that have significant overhanging risks, but Big Pharma stocks do too. Obviously, the patent cliff is the largest, but each specific company has some things that it's dealing with that are a little bit different and unique to their own situation.

Let's go ahead and start out with Abbott Labs. Obviously, one of the biggest news events this year is the spinoff of Abbott Labs and its branded pharmaceuticals business into AbbVie, that's going to happen in a couple weeks now – less than a couple weeks – January 1 is when that is going to officially take place.

The biggest overhang for AbbVie is the biggest success for it, currently, and that's Humira. This drug is a massive success worldwide. It's going to exceed $9 billion in sales this year. It might make it to the number one position – at least number two or three I think.

David: Yeah, with Lipitor gone.

Brenton: Yeah. It's still got a few more years of patent protection left. It's still growing at a good clip, so I think you'll likely see it over $12 billion before all is said and done, but that type of success presents a massive risk to investors. It's exposed them in a significant way to the patent cliff.

David: Yup. It's a huge part of their revenue, overall, right? Abbott's right now, and then AbbVie's even more so. 

Brenton: Yeah, it's going to be more than 50 percent, starting out. That will rise, over time, as Humira continues to grow, but it's an even more significant percentage of their profits. What to do, once that patent cliff hits... 

It's unclear if it's going to fall off a cliff, like we've seen Singulair from Merck just fell off a cliff. Lipitor did the same. This is a biologic; a little more protection there. We're not completely clear on biosimilar legislation and what's going to happen there, so it might be a little more of a slow decline. Maybe 45 degrees is what I'd say is you should count on, at the very least, in terms of the decline. 

That's still going to present a significant risk for this company. How can investors get comfortable, when there's a big risk like that, staring them straight in the face?

Max: I'm going to jump in here.

David: Yeah, no problem.

Max: Looking farther down the pipeline, they have a pretty exciting hepatitis C drug in development. I think it's in Phase III. What are your feelings on that? I think that could become the next big blockbuster for AbbVie.

Brenton: Yeah, it's obviously impressive. Gilead and Abbott both posted some good data. Abbott has, I believe, released the most data, or at least with the longest time horizon so far. Gilead had a really incredible response rate. What was it, 100 percent?

David: A hundred percent. It doesn't get any better than that.

Brenton: A hundred percent. It was a smaller group, and I believe a shorter time frame that it was measured on.

David: Abbott had a 93 percent response rate with null responders, though, which is really impressive because those are hard-to-treat patients, and it shows that even if Gilead's drug is used first, there still should be market for AbbVie's drug cocktail after that.

When I first heard about the spinoff I actually thought it was a somewhat cynical plan by Abbott Labs to really monetize Humira while it was still growing and profitable, but when you actually dig a little deeper into AbbVie there are some interesting things, like the hepatitis C franchise going on.

Brenton: Yeah, and they do have some other Phase III programs. They have a Parkinson's drug, an MS drug, and a drug for endometriosis, which I believe is a female-related disease. I won't go into any farther, because I think I'll butcher it.

In any case, this is a company that is also going to have a significant amount of cash. It's generating a lot of cash before the patent cliff, so I would expect them to do some sort of deal to try and backfill that pipeline a little bit, maybe acquire a previously commercialized drug, or a drug that's about to ramp up, because the hepatitis C opportunity is big, but it's unclear just how big it is.

Obviously, it's a worldwide issue, and reimbursement worldwide is somewhat of a question, especially in some of the areas that have larger hepatitis C-infected populations. In any case, it'll be successful in the US. It will be successful in Europe if approved, but the ultimate revenue opportunity I think is still a question mark.

David: Yeah, and the ultimate catch is you're curing them, right? They're not your patient anymore, once you cure them, so it's not like they're going to get constant repeatable sales like you see with Gilead with its HIV drugs.

Brenton: And with Humira. It's obviously used on a regular basis, and that's part of what fuels massive successes like this, and like Lipitor and many other drugs.