Analysts and executives had predicted that Humira would be the first drug to ever top $20 billion in annual sales by 2018. But as AbbVie’s whole-year tally shows, the rheumatoid arthritis superstar didn’t cross that target off its wish list—and it may not do so in 2019, either.
The final 2018 figure came in so close—only a couple million dollars left to fill. But still, $19.94 billion is not $20 billion. And based on executives’ predictions for 2019, that number will drop by $1 billion instead of rising as previously expected.
A strong dollar left a dent in 2018’s reported number, but the bigger damage came from “direct biosimilar competition in certain international markets,” according to AbbVie. Outside of the U.S., Humira’s fourth-quarter sales dropped 17.5% to $1.30 billion, dragging the quarter’s total to $4.92 billion, which missed analyst expectations of around $5.03 billion.
Back on the company’s third-quarter earnings call in early November, AbbVie Chairman and CEO Richard Gonzalez projected sales erosion of around 26% to 27% ex-U.S. in 2019. Now that expected cut to sales has been increased to 30%—excluding any unfavorable impact from foreign exchange rates—according to newly minted CFO Robert Michael on the company’s fourth-quarter earnings call.
That means about $2 billion in sales will be lost in 2019, and a projected 7% growth in the U.S. will only compensate by $1 billion. Run the math, and you’ll get that global Humira sales will drop $1 billion this year. That, in turn, will just make it even harder for Humira to reach $21 billion in 2020 sales, a target executives put forward back in October 2017.
On Friday's fourth-quarter call, Gonzalez said he’d like to see how the market plays out. “In the end, if we look at the long-term targets we put in place, we still feel confident […] whether or not one product is slightly different than another,” he said.
Humira losing exclusivity has long been haunting AbbVie investors; after all, the drug accounted for about 60% of the company’s total revenue. Consider this: It was only mid-October when Humira copycats from Biogen, Amgen, Novartis’ Sandoz and Mylan launched in Europe, and they've already caused double-digit losses for AbbVie’s drug in the region.
“We have long been planning and preparing for the event that is now upon us,” Gonzalez said on the call. But despite some unexpectedly aggressive discounting in Europe, his message to concerned investors is that the company’s strategy is working, and it’ll be able to absorb the impact from biosimilar assault.
But its fourth-quarter numbers don't look good on that front. Both fourth-quarter earnings per share of $1.90 and total sales of $8.31 billion came in below consensus estimates, the first time since the fourth quarter of 2013, according to data cited by Credit Suisse analyst Vamil Divan, M.D., in a Friday note to investors.
At least AbbVie can count on some growth from the U.S. market, where Humira sales jumped 9.1% in the fourth quarter. The company has fended off almost all biosimilar launches in the U.S. to late 2023, recently adding new settlements with Momenta, Pfizer and, on Friday, Coherus BioSciences, leaving Boehringer Ingelheim the only major player still fighting AbbVie’s patent in Humira’s largest market.
Biosimilar competition has been on the company’s mind, and its countermeasure, according to Gonzalez, is to build a strong pipeline. That plan just took a major blow as AbbVie pulled the plug on a phase 3 trial of its troubled cancer drug Rova-T in small-cell lung cancer and registered $4.12 billion in impairment charges.
Plus, its Johnson & Johnson-partnered cancer blockbuster Imbruvica just flunked a pancreatic cancer trial, nixing the pair’s hope to add a seventh indication to the drug’s label. For 2019, AbbVie expects Imbruvica sales to reach $4.4 billion, compared with $3.6 billion in 2018.
The company is now guiding 2019 EPS at $8.65 to $8.75, or 10% growth at the midpoint. Gonzalez touted the company’s ability to pull that off because “this year many of our key pipeline assets will be at the very early stages of their launch trajectory, and therefore providing minimal upside to the biosimilar impact.”