Humira gives AbbVie solid Q3 support, but biosimilars loom

AbbVie ($ABBV) relies on its top seller Humira to bring home the bacon, bringing in more than half its revenues even as AbbVie prepares for increased biosimilar competition to the med. Sales of the company's blockbuster exceeded analysts' expectations and propelled AbbVie to an earnings beat. But one of the company's hopefuls, hep C med Viekira Pak, missed in Q3, potentially throwing a wrench into AbbVie's plans to reap more from new meds.

The North Chicago, IL-based company's sales jumped 18% during Q3 to $5.9 billion, topping analysts' estimates of $5.8 billion. AbbVie also charted an EPS win with $1.13, beating the Street's prediction of $1.08.

Humira contributed to that haul with $2.2 billion in sales in the U.S., beating analysts' expectations of $2.1 billion. But the drug stumbled a bit outside the U.S. with sales of $1.3 billion, missing the Street's prediction of $1.4 billion--a "surprising" development given that most industry watchers thought that a "miss was unlikely," Evercore ISI analyst Mark Schoenebaum said in a note to investors.

But AbbVie management doesn't seem too worried about the number, Schoenebaum said. The company is forecasting 12% revenue growth for Humira for the year, and is also plotting big things for its blockbuster in the years ahead. AbbVie unveiled a long-term revenue plan that projects 10% sales growth on average for the next 5 years with total sales of $37 billion in 2020.

Still, the company could face a few obstacles with Humira along the way. Copycat versions of Merck's ($MRK) rival drug Remicade are hitting the market in Europe, presenting more competition to the med. And there's already a Humira biosimilar in India, thanks to Zydus Cadila. Biosimilars could start taking a toll sooner rather than later, with Humira revenues dropping from $16 billion in 2017 to $6 billion in 2022, according to Citi analyst Andrew Baum.

The company is also counting on its hep C cocktail Viekira Pak to fill that void, but the drug missed its mark on sales in the U.S. during Q3. The drug brought in $242 million in the U.S. compared to the Street's prediction of $296 million. And things could get worse for AbbVie with Viekira Pak in the months to come as the company deals with regulatory fallout over the med. Last week, the FDA demanded AbbVie update the label for Viekira Pak after reports surfaced that the drug caused serious liver problems in patients.

The company's shares spiraled downward as a result, although the stock has recovered a little since then. Still, the damage seems to have been done, with the warning "likely materially negatively" impacting sales of Viekira Pak and fellow hep C treatment Technivie, Citigroup analysts said.

Meanwhile, AbbVie is steeling itself against biosimilar competition, beefing up sales for newer products and scouting out deals to cushion the blow. Earlier this year, the company shelled out $21 billion for Pharmacyclics ($PCYC) to get its hands on its drugmaker's blood cancer med Imbruvica. That move seems to be paying off, as Imbruvica brought in $267 million in the U.S., beating analysts' estimates of $258 million. The drug also tallied $37 million in sales outside the U.S., surpassing predictions of $28 million.

AbbVie CEO Richard Gonzalez

And AbbVie will continue to look for deals to boost its numbers. "We can't be totally relying on internal R&D to bring innovation," CEO Rick Gonzalez said on a conference call, as quoted by Bloomberg, adding that the company would seek opportunities "over the next year or two" but not another on the same scale as Pharmacyclics.

- here's AbbVie's earnings release
- here's its long-term forecast
- read the Bloomberg story

Special Reports: The top 15 pharma companies by 2014 revenue - AbbVie | The 10 best-selling drugs of 2013 - Humira

Suggested Articles

Johnson & Johnson faces a litany of problems, but executives are clearly not concerned—at least not about the company's short-term fortunes.

This week, Goldman Sachs resurrected a burning question: How can pharma companies profit from curing patients with one-time gene and cell therapies?

CMS has determined how it'll pay for Gilead's CAR-T cancer therapy, Yescarta, for outpatient use, but hasn't yet decided on Gilead's…