8. AbbVie

While AbbVie's Humira continued churning out megablockbuster sales in the face of biosim competition, its once-promising lung cancer drug Rova-T took a spectacular fall in 2018. (AbbVie)

2018 revenue:
$32.75 billion
2017 revenue: $28.22 billion
Headquarters: North Chicago, Illinois

At first glance, AbbVie’s financial statements show it had a very good year in 2018. The company posted a 16% increase in sales and a 40% hike in earnings per share.

Its top-selling drug, Humira—which also happens to be the best-selling drug in the world—may not have hit the $20 billion milestone it was expected to reach, but it came in only a few million short at $19.94 billion.

And its adjusted tax rate was just 8.7%, thanks to the reform package that took effect in January, the lowest rate in Big Pharma.

But take a closer view, and 2018 doesn’t look so gilded. Take the stock market picture, for instance; after more than doubling its market cap in 2017 to $154 billion, AbbVie shrank last year as shares fell to the $90 range from more than $100.

Or zero in on some of the notes to AbbVie’s financial statements, where the company discloses the write-offs it took after closely watched cancer drug Rova-T failed spectacularly. The crown jewel of AbbVie’s Stemcentrx buyout—a deal worth $5.8 billion upfront and another $4 billion in potential milestones—Rova-T first flunked a phase 2 study, posting poor results in third-line lung cancer patients and sinking AbbVie’s hopes of an accelerated approval.

That was in March. In November, Rova-T not only failed to beat chemo in the phase 3 Tahoe study, but independent data monitors actually flagged the drug for a shorter overall survival rate than the chemo drug delivered.

After AbbVie slammed the brakes on that trial in the fourth quarter, it took a whopping $4.1 billion charge against earnings. By March of 2019, the company was planning to lay off 178 staffers from the Stemcentrx operations in South San Francisco.

Meanwhile, AbbVie was slashing Humira’s price in Europe to contend with the biosimilars coming after its market share. After copycat versions launched in October, discounts topped 80% in one high-profile tender, and by the fourth quarter, Humira’s take outside the U.S. had dropped 17.5% to $1.3 billion for the period. Bernstein analyst Ronny Gal sees the trend accelerating to the point where Humira would lose more than one-third of its ex-U.S. sales this year.

Those sorts of stats worry market watchers, because Humira represents more than 60% of AbbVie’s top line. But thanks to settlements with most of the biosimilar makers looking to knock off the megablockbuster, copies aren’t expected to hit the U.S. market until January 2023, giving the company more time to build up its newer drugs, usher some candidates to market, and further build out its pipeline.

AbbVie’s lineup does feature a couple of drugs that are ready to take on the task. Its J&J-partnered blood cancer drug Imbruvica, acquired in its Pharmacyclics deal in 2015, grew to $3.6 billion in 2018 and is expected to take another leap this year to $4.4 billion. And the two partners are still working to expand Imbruvica into new indications; though the drug chalked up a defeat in pancreatic cancer last year, it scored a combo win alongside Gazyva this January.

Then there’s Mavyret, the pan-genotypic hepatitis C drug AbbVie cannily launched at a cut-rate price. It brought in $3.4 billion last year, grabbing share from Gilead Sciences’ well-known hepatitis C blockbusters Harvoni and Sovaldi. And to those who worry that Mavyret will suffer the same fate as Gilead’s shrinking hepatitis C franchise, CEO Richard Gonzalez had this to say during the company’s first-quarter earnings call last year: “This is a market that is going to be around for a long, long time.” In countries where AbbVie doesn’t already have the market lead, “we’re awfully close” to Gilead and “continuing to move in that direction,” Gonzalez said at the time.

Coming down the pipeline are two more potential blockbusters. Skyrizi (risankizumab), an IL-23 inhibitor aimed at psoriasis and psoriatic arthritis, won approval in Japan in March and is on its way to an FDA nod later this year and $1.74 billion in sales in 2023, analysts say.

And then there’s rheumatoid arthritis drug upadacitinib, which analysts at Cortellis have pegged as the biggest launch of 2019. Up for an FDA approval in August, it’s expected to pull in more than $2 billion by 2023, the year Humira biosims roll out stateside.

8. AbbVie