Shares of AbbVie Inc. experienced a 6.2% drop toward a six-week low in premarket trading on Thursday. Despite the biopharmaceutical company not meeting first-quarter profit expectations, it raised its full-year outlook. The disappointing Q1 performance has been attributed to increasing generic competition for its blockbuster arthritis drug, Humira.
In the first quarter, AbbVie’s net income fell to $239 million or 13 cents per share, a significant drop compared to $4.49 billion or $2.51 a share in the same quarter last year. After excluding nonrecurring items, the adjusted earnings per share were down to $2.46 from $3.16, missing the FactSet consensus of $2.51. On a positive note, the company’s revenue saw a 9.7% increase to $12.23 billion, slightly surpassing the FactSet consensus of $12.17 billion.
Among AbbVie’s top-selling drugs, Humira sales fell 25.2% to $3.54 billion. On the other hand, sales for Skyrizi, a drug used in treating moderate to severe plaque psoriasis, jumped to $1.21 billion. Rheumatoid arthritis treatment Rinvoq’s sales rose to $601 million.
AbbVie updated its full-year 2021 adjusted earnings per share guidance to be in the range of $12.37 to $12.57, an increase from its previous range of $12.32 to $12.52. While the guidance update reflects continued growth, AbbVie’s CEO Richard Gonzalez said the company’s performance was negatively affected by the ongoing COVID-19 pandemic. The pandemic has created a developing market environment and negatively impacted the execution of clinical trials.
Despite the challenges, Gonzalez said he remains confident in AbbVie’s ability to fuel growth in 2021 and beyond, citing the company’s continued success with Skyrizi and Rinvoq as reasons for optimism. In the statement, Gonzalez said, “In particular, the strong continued growth of our immunology portfolio and robust launch trajectory of Ubrelvy support our confidence in our ability to achieve our long-term growth objectives.” Ubrelvy is a drug developed by AbbVie to treat migraines.
The company has been working to diversify its drug production line and reduce its dependence on Humira, which has contributed significantly to the company’s revenue. AbbVie has been under mounting pressure for quite some time now, as biosimilars to Humira have been authorized in several countries. Patients, healthcare providers, and payers are increasingly considering biosimilars as a cost-effective alternative to branded therapies.
AbbVie is involved in several initiatives to expand its product offerings and replace the declining revenue brought about by the loss of exclusivity for Humira. One of the initiatives includes its $63 billion acquisition of Allergan Plc, a deal that expanded its range of drugs in its portfolio. The acquisition added Botox, an anti-wrinkle treatment, Ozurdex, used in the treatment of macular edema, and Juvederm dermal filler, among others, to the company’s lineup. The new drugs have partially offset the drop brought about by Humira exclusivity losses.
In July 2021, Bloomberg reported that generic versions of Humira may hit the market, potentially taking away substantial market share from AbbVie. Facing increasing competition from generics, AbbVie must look for ways to capture market share and protect its margins. According to Moody’s Investors Service, one potential solution is for the company to continue to invest in developing novel drugs to maintain market leadership and grow revenues.
In conclusion, AbbVie’s Q1 performance may have registered a setback due to mounting competition posed by Humira’s biosimilars. As a result, the company is making efforts to reduce dependence on the drug by diversifying its product offerings, boosting innovation, and expanding drug treatment for patients affected with severe disorders. The company’s updated full-year 2021 earnings per share outlook serves as a testament to its continued commitment to growth and value creation for shareholders. Despite the uncertain market environment created by the pandemic, AbbVie’s management remains optimistic about the company’s growth prospects in 2021 and beyond.
