AbbVie Inc (ABBV) Has More Blockbusters on the Horizon

Advertisement

AbbVie Inc (NYSE:ABBV) is the maker of the world’s No. 1 selling prescription drug for 2014 and 2015 — Humira. In 2014, that one drug brought in $12 billion in revenue. In 2015, it hit $14 billion. ABBV stock has been enjoying good times off of this serious blockbuster.

ABBV Stock: AbbVie Has More Blockbusters on the HorizonWhat qualifies as a blockbuster? A drug that can hit the market and ring up $1 billion in sales in its first 12 to 18 months. And this is no arbitrary metric.

The fact is, today it costs around $2 billion to get a new drug through clinical trials and Food and Drug Administration approval for sale.

If you can hit $1 billion in revenue the first year out, you’re well on your way to paying for the upfront costs, and then some.

The problem is, big pharma relies on these blockbusters and they come with a hook — the patent cliff.

Future Blockbusters for ABBV Stock?

The patent cliff refers to the fact that these blockbusters come off patent eventually and other firms can begin making biosimilars and generic versions, which pretty much dry up the revenue for these cash cows.

Fortunately for ABBV, in Humira’s case, while the drug was supposed to come off patent next year, the company has won a number of ancillary patents that will keep the drug in AbbVie’s portfolio until 2022.

But it still needs to keep the blockbuster train running. Its recent release of hepatitis C drug Viekira and cancer drug Imbruvica are both certainly welcome additions. Both are expected to be worth billions a year in revenue going forward.

And its recently announced collaboration with BioArctic on Parkinson’s and similar nervous system disorders, shows that ABBV is doing what it takes to remain competitive in the big pharma world.

A move into neurodegenerative drugs has been in AbbVie’s sights for a while. ABBV currently sells Duopa, which won FDA approval last year. It’s used in the treatment of motor fluctuations in advanced Parkinson’s disease. ABBV is also in Phase III for a next-generation version of Duopa.

BioArctic also develops new treatments for other diseases like Alzheimer’s and spinal cord injury. This collaboration may be the first step in an acquisition of BioArtic if things go well. And if they go well, ABBV stock is going to have a full stable of thoroughbreds to back it up.

When you have the top-selling drug in the world year after year, you have some time to enjoy the view from the top. But AbbVie shows no signs of slacking off. And that’s very encouraging.

The stock is up 12.5% in the past 6 months and it’s still throwing off a very respectable 3.6% dividend. Annual double-digit growth is more the rule than the exception for AbbVie and that should continue for a long time to come.

With that kind of dividend and that kind of drug pipeline, ABBV stock is a great long-term choice.

Richard Band’s Profitable Investing advisory service helps retirement savers outperform the market without losing a minute of sleep along the way. His straightforward style and low-risk value approach has won seven Best Financial Advisory awards from the Newsletter and Electronic Publishers Foundation.

More From InvestorPlace


Article printed from InvestorPlace Media, https://investorplace.com/2016/09/abbvie-abbv-blockbusters-horizon/.

©2024 InvestorPlace Media, LLC