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AbbVie : company profile

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AbbVie is the pharmaceutical business spun out of Abbott Laboratories as a separate company at the beginning of 2013. Key products include the arthritis drug Humira, currently the world's top-selling pharmaceutical drug, and responsible for almost two-thirds of the group's revenues in 2017. Although AbbVie has a collection of smaller or developing products it remains vulnerable to the impact of patent expiry of Humira in the US after 2016. As a biologic product, it is hard for generic manufacturers to copy, but that threat has prompted Abbvie to begin seeking smaller bolt-on acquisitions. It made a series of offers to acquire UK-based Shire in 2014 but these were later abandoned. Instead the group snapped up US developer Pharmacyclics in 2015 for $21bn. Other deals have followed.

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Competitors

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Brands & Activities

In October 2011, Abbott Laboratories announced plans to split into two separate companies, one housing pharmaceuticals, and the other grouping together the medical devices, infant nutrition and diagnostic operations as well as generics. That process took place in January 2013. The pharmaceutical company adopted the new name AbbVie, while the diversified products business remains Abbot Laboratories.

AbbVie's main market is the US, although it operates in a total of 130 countries worldwide, in many cases through affiliates or distributors. The group has particular strengths in diabetes, AIDS and respiratory infections and also operates substantial nutritional and diagnostics subsidiaries.

The company's most important pharmaceutical product is still Humira, a breakthrough treatment for rheumatoid arthritis approved at the end of 2002, and the focus of the group's biggest ever launch during 2003. It was first developed by Knoll Pharmaceuticals, a company acquired by Abbott in 2001. The product has also been found to be effective for the treatment of several other diseases including psoriasis, Crohn's disease and ulcerative colitis. Humira's sales have risen sharply as a result. In 2006, it was Abbott's first product ever to achieve sales in excess of $2.0bn, and sales have continued to grow dramatically, reaching a new high of $18.4bn for 2017, making it the #1 medicine globally. It dominates Abbvie's portfolio, accounting for almost two-thirds of total sales. The company has rights in all markets except Japan, where the drug is marketed by Eisai. Sales are expected to top $20bn by 2020, despite the expiration of Humira's patent in the US at the end of 2016 and in Europe two years later. Because it is a biologic drug, however, Humira is very hard for generic manufacturers to copy. It has agreed to allow production of biosimilar copies but these won't be available in the US until at least 2022 (but in Europe from the end of 2018).

With its eye set on strengthening its portfolio, AbbVie revealed in 2014 that it had made a series of offers to acquire Ireland-based biotech developer Shire. However these, of which the last valued the target at $46.5bn, had been rebuffed. Shire has a collection of treatments including ADHD treatment Adderall but, perhaps more importantly, has its tax base in Ireland. That was designed to allow AbbVie to shift more of its own profit out of the US through tax inversion. However the resulting controversy over tax inversions prompted AbbVie to abandon its plan towards the end of the year.

It was back on the acquisition trail in March 2015, poaching US developer Pharmacyclics from under the nose of its marketing partner Johnson & Johnson, with an offer of $20.8bn in cash and equity. Pharmacyclics specialises in oncology drugs, with a portfolio led by hemophilia treatment Imbruvica. The deal completed in May the same year. Johnson & Johnson remains the marketing partner for that drug. Imbruvica is now Abbvie's #2 drug, contributing sales of $2.57bn in 2017. Also in 2015, the group launched Viekira Pak, a treatment for hepatitis C, with some success. First year sales were almost $1.64bn, but performance slowed dramatically in 2016. That producted is marketed internationally as Viekirax or Exviera. In 2017, the group launched follow-up product Mavyret, with notable success. Combined sales of its twin HCV drugs were $1.27bn for 2017. The group's most promising new product is Orilissa, a treatment for pain associated with endometriosis. It was approved in summer 2018, with sales expected to top $1bn by 2020.

The group's other pharmaceutical products are considerably smaller by sales, and subject to intense competition or under threat of patent expiry. Androgel is the leading testosterone replacement product in the US. AbbVie has rights in the US only, and generic competition commenced during 2014, causing a steady decline in sales. A more serious threat to Androgel came from legal action from patients claiming that the drug caused serious cardivascular problems. The first two cases came to court in summer 2017. Abbvie lost both and suffered awards from damages totalling $290m. Thousands of other claims are still to be heard.

Another important product is the HIV treatment Kaletra/Aluvia, but it too has already passed its peak, slipping under the $1bn level in 2013, and falling to $423m by 2017.

Other important products include Synagis, AstraZeneca's vaccine for respiratory disease in children, for which it has ex-US international rights. Sales were $738m in 2017. It has US rights to Synthroid for thyroid disease, with sales of $781m. Prostate cancer drug Lupron is a legacy from TAP Pharmaceuticals, an old joint venture between Abbott and Takeda of Japan, created in the late 1970s to market the latter's products in North America, primarily the multi-billion-selling ulcer treatment Prevacid. This and Lupron were manufactured in Japan by Takeda and supplied to TAP for distribution in North America. As a result of competition and a contraction in the market, the TASP arrangement was terminated in 2008. Takeda set up its own subsidiary in North America to take back rights to Prevacid and two other products, which it now markets itself. Abbott, and subsequently AbbVie retained selected regional rights to Lupron, which generated sales of $829m in 2017. Other products in the portfolio include anesthetic Sevoflurane and Creon for pancreatic disease ($831m, in the US only).

Other new launches include Duodopa for Parkinson's Disease (sales of $355m in 2017), the anaesthetic Sevoflurane ($410m) and Zynbryta for MS.

In 2016, the group paid $6.4bn to acquire biotech developer Stemcentrx, which is developing a collection of important oncology drugs including Rova-T.

Several other products have already lost patent protection. One of the most important of these is the high cholesterol treatment TriCor. Rights to this were shared with the pharmaceutical arm of Belgian conglomerate Solvay. In 2009, Abbott acquired its smaller partner for €4.5bn, in a move which allowed it to expand its presence in Central and Eastern Europe, where Solvay already had a presence. In 2006, Abbott acquired smaller company Kos Pharmaceuticals, the developer of another cholesterol treatment Niaspan. The following year it applied for FDA approval for a compound which combined Niaspan with simvastatin to combat both good and bad cholesterol in a single pill. The product was launched in 2008 as Simcor. It also developed an alliance with AstraZeneca to combine the active ingredient from the latter's Crestor with Simcor, under the name Trilipix. That product launched in 2009. However patents for TriCor, Trilipix and Niaspan all expired between Nov 2012 and Sept 2013. In many cases, AbbVie competes with generic versions produced by its own former parent Abbott Laboratories.

Financials

AbbVie's combined revenues for 2015 rose 15% to a record high of $22.86bn. Net earnings almost tripled to $5.14bn as a result of a significant reduction in expenses.

The continuing growth of Humira lifted topline by a further 12% for 2016 to $25.64bn, while earnings jumped 16% to $5.95bn. The US is the single biggest market, contributing 62% of sales, followed by Germany, the UK and Spain.

Another big jump for Humira pushed revenues up to $28.22bn in 2017. However net earnings slipped back to $5.31bn.

Background

See Abbott Laboratories profile.

Last full revision 14th June 2016

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