AbbVie (NYSE:ABBV) has gotten a lot of attention recently thanks to the much-anticipated approval of its hepatitis C drug Viekira Pak, but Viekira Pak's December approval means it didn't have much time on the market to move the needle for AbbVie in the fourth quarter. Instead, AbbVie relied on sales growth for its blockbuster autoimmune drug Humira to fuel its 8.9% operational growth last quarter.
By the numbers
AbbVie's fourth-quarter sales totaled $5.37 billion, which was up 8.9% after adjusting results to remove currency conversion exchange, and 5.1% on an as-reported basis from last year. The fourth-quarter results contributed to 7.1% adjusted growth in full-year sales to $19.88 billion. Including currency conversion headwinds, AbbVie's full-year sales grew 5.8%.
The company's gross margin improved by 4.1% year over year in the quarter, however, the break-up fee paid to Shire Plc following its failed acquisition attempt pushed net income negative for the quarter.
Adjusting out the impact of currency conversion and the break-up fee, AbbVie's fourth-quarter earnings per share, or EPS, totaled $0.89, and full-year EPS totaled $3.32, up 5.7% from 2013.
Behind the numbers
Humira remains the single biggest driver of AbbVie's revenue. After adjusting for currency headwinds, sales of Humira grew 14.4% to $3.36 billion in the fourth quarter, and 18.9% to $12.54 billion for the entire year.
Although Humira accounts for 63% of AbbVie's 2014 revenue, AbbVie also reported solid growth for the lung infection prevention drug Synagis and the Parkinson's disease drug Duodopa, both of which are sold overseas. International sales of Synagis grew 4.9% ex-currency to $298 million in Q4 and 9.3% ex-currency to $835 million for the full year. Sales of Duodopa increased 25.4% ex-currency to $56 million in the fourth quarter, and 24.7% ex-currency to $220 million for the full year.
Offsetting growth in those drugs was a 69.5% drop in full-year sales of AbbVie's dyslipidemia drugs, including the cholesterol drug Niaspan, to $328 million, a 9.7% slide in sales of the testosterone drug Androgel to $934 million, and a 6.6% dip in sales of the HIV drug Kaletra to $835 million.
Although the break-up of the deal with Shire cost investors $2.23 billion in related expenses and significantly muddied AbbVie's profitability last quarter, the company's cost-cutting moves were evident in its cost of goods sold, which fell from 25.08% a year ago to 20.52% in the fourth quarter.
All eyes are looking toward first-quarter 2015 earnings results to see how much market share Viekira Pak can wrestle away from hepatitis C treatment leader Gilead Sciences. Gilead Sciences' hepatitis C drug Sovaldi posted $10.3 billion in sales in 2014, leading many to believe that Viekira Pak, which is approved to treat genotype 1 HCV patients, could be a a billion-dollar blockbuster.
In December, that view was strengthened when AbbVie announced it had secured an exclusivity deal with pharmacy benefit manager Express Scripts for Viekira Pak in hepatitis C genotype 1 patients. Despite receiving FDA approval just two weeks prior to the end of the quarter, AbbVie still reported that Viekira Pak sales totaled $48 million in the fourth quarter.
Viekira Pak's expected contribution this year, plus Humira's ongoing dominance as a leading treatment for conditions including rheumatoid arthritis, has AbbVie guiding investors to expect adjusted EPS of between $4.25 and $4.45 in 2015. If the company can deliver on that forecast, it would represent 28% growth from 2014 and give the company more flexibility to return money to investors via buybacks and dividends.