AbbVie: Humira and More

09/28/2017 5:00 am EST


Ingrid Hendershot

Founder and President, Hendershot Investments, Inc.

AbbVie (ABBV) is a leading biotechnology company that was formed in 2013 following its separation from Abbott Laboratories (ABT), notes Ingrid Hendershot, value-focused money manager and editor of Hendershot Investments.

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AbbVie's products are focused on treating conditions such as chronic autoimmune diseases in gastroenterology, rheumatology and dermatology; oncology, including blood cancers; virology, including hepatitis C and HIV.

Humira accounted for 63% of the company’s revenues in 2016. In addition to dedicating research and development resources to further expand indications for Humira, AbbVie also has invested more than $27 billion in acquisitions in the last four years.


As a result, AbbVie has a promising pipeline of new medicines, including more than 50 investigational programs in clinical development across such important medical specialties as immunology, virology, oncology and neurology, with additional targeted investment in cystic fibrosis and women's health.

AbbVie is on track to launch more than 20 new products through 2020 with the pipeline having the potential to deliver nearly $30 billion in sales.

The company made significant progress on its pipeline during the quarter including positive top-line results from its new drug to treat severe rheumatoid arthritis and phase 2 studies for patients with Crohn’s disease.

After second quarter earnings were released, AbbVie announced that the European Commission (EC) granted marketing authorization for Maviret, a once -daily, ribavirin-free treatment for adults with chronic hepatitis C virus (HCV) infection across all major genotypes.

Maviret is a new, 8-week treatment for patients who comprise the majority of the estimated 71 million people worldwide living with hepatitis C.

AbbVie expects to deliver double-digit adjusted EPS growth on average through 2020 with total company sales of about $37 billion expected by 2020.

The company also expects significant margin expansion, targeting a 2020 operating margin greater than 50% with an average of 100-200 basis points of improvement per year.

Management is committed to returning cash to shareholders through a strong and growing dividend. The company announced a 12% increase in the dividend for fiscal 2017 and a new $5 billion share repurchase program. The dividend currently yields a healthy 3.6%.

AbbVie’s outlook for 2017 EPS is in the range of $4.55-$4.65, reflecting strong double-digit growth. Long-term investors may want to inject AbbVie into their portfolio, a high-quality biotech firm with double-digit growth and a healthy dividend.

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