AbbVie Inc.

Last modified by Md. Touhidul Islam on 2024/02/25 06:44

Contents

Summary
Brief Company Overview
Recent Developments
Recent Financing Activities
Financial Performance Highlights
- Q3 2023 Highlights
- Annual Performance Highlights
Business Overview
Company History
References

Summary

AbbVie Inc. is a renowned biopharmaceutical company specialising in immunology, oncology, aesthetics, neuroscience, and eye care, selling drugs like Humira, Imbruvica, Rinvoq, Venclexta, and Mavyret/Maviret.
The company was headquartered in North Chicago, Illinois, and was established in 2013 when it became a separate company from Abbott Laboratories.
AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialisation and sale of innovative medicines and therapies.
The 52-week price range of Abbvie is $177.01 to $178.49, the trailing PE ratio is 65.59, the gross margin is 62.42%, the operating margin is 23.49%, the net margin is 8.95%, and the return on assets is 3.61% as of 31 December 2023.
The company's net revenues for 2023 decreased by 6.4% compared to the previous year, reaching $54,318 million. This decline was primarily due to economic pressures and direct biosimilar competition, while international revenues increased by 0.8%.

Brief Company Overview

AbbVie Inc. (NYSE: ABBV)is a globally recognised biopharmaceutical company with a strong presence in immunology, oncology, aesthetics, neuroscience, and eye care. The company sells Humira (adalimumab), Imbruvica (ibrutinib), Rinvoq (upadacitinib), Venclexta (venetoclax), Mavyret/Maviret (glecaprevir/pibrentasvir) and other drugs in support of immunology, oncology, aesthetics, neuroscience, and eye care. The company was headquartered in North Chicago, Illinois, and was established in 2013 when it became a separate company from Abbott Laboratories.¹ It is ranked sixth on the list of largest biomedical companies by revenue.

AbbVie distributes its products globally to wholesalers, distributors, government agencies, healthcare facilities, speciality pharmacies, and independent retailers. In the US, it works with independent wholesale distributors and centralised national payers systems for reimbursement. AbbVie operates as a single global business segment.

AbbVie employed approximately 50,000 employees in over 70 countries as of January 31, 2024. The current CEO of AbbVie Inc. is Robert A. Michael.²

As of December 31, 2023, the company had 1,823,046,087 shares outstanding, and during the year ended on December 31, 2023, the company paid cash dividends amounting to $10,539 million. The company has 4,030 institutional shareholders, and Vanguard Group Inc. is the largest shareholder with 9.08% shareholding. The 52-week price range of Abbvie is 177.01 to 178.49, and the trailing PE ratio is 65.59. The earnings per share of the company are 2.73 for the year that ended on 31 December 2023; the gross margin is 62.42%, the operating margin is 23.49%, the net margin is 8.95%, and the return on assets is 3.61% as of 31 December 2023.

Recent Developments

On February 22, 2024, AbbVie and Tentarix Biotherapeutics partnered for a year to develop conditionally active, multi-specific biologic candidates in oncology and immunology, leveraging Tentarix's Tentacles™ platform.³
On February 20, 2024, AbbVie unanimously selected Robert A. Michael, AbbVie's current president and chief operating officer, to succeed Richard A. Gonzalez as the company's chief executive officer (CEO).⁴
On January 26, 2024, AbbVie invested $223 million in a Singapore manufacturing facility, aiming to create over 100 jobs and expand its biologics manufacturing capacity globally.⁵
On January 4, 2024, AbbVie and Umoja Biopharma signed exclusive license agreements to develop multiple in-situ generated CAR-T cell therapy candidates in oncology using Umoja's proprietary VivoVecTM platform.⁶
On December 5, 2023, AbbVie Inc. and BigHat partnered to develop next-generation therapeutic antibodies in oncology and neuroscience. BigHat will use its Milliner™ platform and high-speed wet lab to design and select high-quality antibodies.⁷
On November 30, 2023, AbbVie and ImmunoGen agreed to acquire ImmunoGen's ELAHERE cancer therapy, a first-in-class antibody-drug conjugate approved for platinum-resistant ovarian cancer. This acquisition will enhance AbbVie's solid tumour presence and complement ImmunoGen's next-generation ADC pipeline.⁸

Recent Financing Activities

As of December 31, 2022, AbbVie received proceeds from long-term debt amounting to $2,000 million, which is utilised in business acquisitions and long-term loan repayments.⁹
As of December 31, 2023, AbbVie received proceeds from stock-based options amounting to $180 million, which is utilised in the payment of stock-based compensation of the employees.¹⁰

Financial Performance Highlights

Q3 2023 Highlights

Net revenues for the third quarter as of 30 September 2023 were $13,927 million, declining by 6% compared with the prior year's third quarter revenue, which amounted to $14,812 million. In Q3 2023, in the United States, revenue decreased 7.7% for the three months ended September 30, 2023, primarily driven by decreased consumer demand due to economic pressures and direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, revenues increased 0.8% for the three months ended September 30, 2023, primarily driven by the continued impact of direct biosimilar competition. Gross Profit for the third quarter as of 30 September 2023 was $7,442 million, which declined by 24% compared with the prior year's third quarter gross profit, which amounted to $9,790 million, resulting in a decline in gross profit of $2,348 million. The gross margin for the third quarter as of 30 September 2023 was 53.44%, declined by 12.66% compared with the prior year's third quarter gross margin, which amounted to 66.10%, resulting in a decline in profitability. Gross Margin was unfavourably impacted by an intangible asset impairment charge of $2.1 billion related to Imbruvica, higher amortisation of intangibles and changes in product mix, partially offset by the favourable impact of tax law changes in Puerto Rico. Earnings Per Share (EPS) for the third quarter as of 30 September 2023 was 1.00, a decline of 78% compared with the prior year's third quarter EPS amounting to 2.22. During the nine-month period that ended on September 30, 2023, the company paid a cash dividend amounting to $7,913 million.

Annual Performance Highlights

Net revenues for the year ended on 31 December 2023 were $54,318 million, declined by 6.4% compared with the prior year's revenue ended on 31 December 2022, which amounted to $58,054 million, resulting in a decline in the net revenue by $3,736 million. In the United States, revenue decreased 8.4% during 2023, primarily driven by decreased consumer demand due to economic pressures and direct biosimilar competition following the loss of exclusivity on January 31, 2023. Internationally, revenues increased by 0.8%, primarily driven by the continued impact of direct biosimilar competition.

Gross Profit for the year ended on 31 December 2023 was $33,903 million, which declined by 17% compared with the prior year's gross profit ended on 31 December 2022, which amounted to $40,640 million, resulting in a decrease in the gross profit by $6,737 million. The Gross Margin for the year ended on 31 December 2023 was 62.42%, which declined by 7.59% compared with the prior year's gross margin that ended on 31 December 2022, which amounted to 70.00%, resulting in a decline in profitability. The gross margin was unfavourably impacted by intangible asset impairment charges of $3,600 million primarily related to Imbruvica, CoolSculpting and Liletta, higher amortisation of intangibles and changes in product mix, partially offset by the favourable tax law changes in Puerto Rico.

Net Profit for the year ended on 31 December 2023 was $4,863 million, indicating a decline of $6,973 million, compared to the net profit of 2022, which amounted to $11,836 million. The Net Margin for the year ended on 31 December 2023 was 8.95%, which declined by 11.44% compared with the prior year's net margin that ended on 31 December 2022, which amounted to 20.39%, resulting in a significant decline in profitability. Earnings Per Share (EPS) for the year ended on 31 December 2023 was $2.73, a decline of 59% compared with the prior year's EPS ended on 31 December 2022, which amounted to $6.65, resulting in a decline in the EPS by $3.92. The company paid cash dividends amounting to $10,539 million for the year ended 31 December 2023 which is higher than the prior year’s cash dividends amounting to $10,043 million for the year ended 31 December 2022. The net cash generated in operating activities was $22,839 million, and the net cash generated was $24,943 million in 2023 and 2022, respectively. The net cash used in investing activities was $2,009 million, and the net cash used was $623 million in 2023 and 2022, respectively. The net cash used in financing activities was $17,222 million and $24,803 million in 2023 and 2022, respectively.

AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialisation and sale of innovative medicines and therapies. However, there are two major geographical segments in financial information, such as the United States and the International. In the United States segment, the revenue was $41,883 million in 2023 compared to $45,713 million in 2022, indicating that the revenue declined by 8.4%. In the International segment, the revenue was $12,435 million in 2023 compared to $12,341 million in 2022, indicating that the revenue increased by 0.8%. Revenues in Germany, the United Kingdom and Spain declined, whereas revenues in Japan and China increased.

Business Overview

AbbVie is a global, diversified, research-based biopharmaceutical company positioned for success with a comprehensive product portfolio that has leadership positions across immunology, oncology, aesthetics, neuroscience and eye care. The company is approved to treat autoimmune diseases, including rheumatoid arthritis, Crohn's disease, plaque psoriasis, and ulcerative colitis. AbbVie has operations in over 70 countries, including the USA, Germany, Canada, Japan, China, Spain, Italy and the United Kingdom. AbbVie distributes its products globally to wholesalers, distributors, government agencies, healthcare facilities, speciality pharmacies, and independent retailers. In the US, it works with independent wholesale distributors and centralised national payers systems for reimbursement. AbbVie operates as a single global business segment dedicated to the research and development, manufacturing, commercialisation and sale of innovative medicines and therapies. However, there are two major geographical segments in financial information, such as the United States and the International.

abbvie inc

Segmental (Research-based biopharmaceutical) Analysis

The only segment of the company deals with research-based biopharmaceutical products under six categories such as immunology, oncology, aesthetics, neuroscience, eye care and other products. The immunology products include Humira, Skyrizi and Rinvoq. The oncology products include Imbruvica, Venclexta/Venclyxto, Epkinly and Elahere. The aesthetics products include Botox Cosmetic, The Juvederm Collection of Fillers and Other aesthetics. The neuroscience products include Botox Therapeutic, Vraylar, Duopa and Duodopa, Ubrelvy and Qulipta. The eye care products include Ozurdex, Lumigan/Ganfort, Alphagan/Combigan, Restasis, Refresh/Optive, Xen and Durysta. Other products include Mavyret/Maviret, Creon, Lupron, Linzess/Constella and Synthroid.

AbbVie is among the top three pharmaceutical companies worldwide based on sales of drugs and treatments. AbbVie’s primary product, Humira (adalimumab), is the world’s best-selling drug, with sales of $14 billion in 2023. Humira treats autoimmune diseases such as rheumatoid arthritis, Crohn’s disease, plaque psoriasis, and ulcerative colitis. AbbVie has a market share of 8.6% in the global pharmaceutical market, excluding generics and orphan drugs, as of 2023. AbbVie’s market share in the immunology segment is 18.4%, making it the leader in this field.

Financial information of this segment is divided into two main geographic segments: the United States and the International. With respect to the United States segment, revenue decreased by 8.4% in 2023 to $41,883 million from $45,713 million in 2022. The revenue in the International division climbed by 0.8% from $12,341 million in 2022 to $12,435 million in 2023. While revenues in China and Japan climbed, they dropped in Germany, the UK, and Spain.

Other Business Information

AbbVie's products are generally sold worldwide directly to wholesalers, distributors, government agencies, health care facilities, speciality pharmacies and independent retailers from AbbVie-owned distribution centres and public warehouses. Certain products (including aesthetic products and devices) are also sold directly to physicians and other licensed healthcare providers. Although AbbVie's business does not have significant seasonality, AbbVie's product revenues may be affected by end customer and retail buying patterns, fluctuations in wholesaler inventory levels and other factors.

In the United States, AbbVie distributes pharmaceutical products principally through independent wholesale distributors, with some sales directly to retailers, pharmacies, patients or other customers. In 2023, three wholesale distributors (McKesson Corporation, Cardinal Health, Inc. and AmerisourceBergen Corporation) accounted for substantially all of AbbVie's pharmaceutical product sales in the United States. No individual wholesaler accounted for greater than 39% of AbbVie's 2023 gross revenues in the United States. Outside the United States, AbbVie sells products primarily to wholesalers or through distributors and, depending on the market works through largely centralised national payer systems to agree on reimbursement terms.

abbvie inc. building

AbbVie faces intense competition from other research-based pharmaceuticals and biotechnology companies, including anti-TNF products, JAK inhibitors, and BTK inhibitors. Other companies have also developed or are marketing products that are positioned as competitors to Botox. Technological innovations in pharmaceutical products are crucial, and changes in medical practices can lead to product obsolescence. Price is also a competitive factor, and the substitution of generic and biosimilar products for branded ones creates pressure on AbbVie's products without patent protection. New products or treatments introduced by competitors could decrease revenues and sales volume for AbbVie's products.

AbbVie entered into a definitive agreement under which AbbVie will acquire Cerevel Therapeutics Holdings, Inc. (Cerevel Therapeutics). Under the terms of the agreement, AbbVie will acquire all outstanding shares of Cerevel Therapeutics for $45.00 per share in cash for a total value of approximately $8.7 billion. The transaction is expected to close in 2024 subject to regulatory approvals and other customary closing conditions. Subsequent to 2023, on February 12, 2024, AbbVie completed its previously announced acquisition of ImmunoGen, Inc. (ImmunoGen). Under the terms of the agreement, AbbVie acquired all outstanding shares of ImmunoGen for $31.26 per share in cash for a total value of approximately $10.1 billion.

Company History

In 1888, a 30-year-old man named Dr Wallace C. Abbott founded the Abbott Alkaloidal Company. To reflect the company's growing research orientation and move into synthetic compounds, the name was changed to Abbott Laboratories in 1915. On October 19, 2011, Abbott Laboratories announced its plan to separate into two publicly traded companies, spinning off its research-based pharmaceutical manufacturer division. This spin-off company, named AbbVie, was formed on April 10, 2012. The separation was fully effective on January 1, 2013, and AbbVie was officially listed on the New York Stock Exchange (ABBV) on January 2, 2013.¹¹

Since 2013, the company experienced significant growth from acquisitions. In January 2014, the company acquired ImmuVen. On September 3, 2014, AbbVie and Infinity Pharmaceuticals entered into a global collaboration to develop and commercialise duvelisib, Infinity's PI3K inhibitor, for the treatment of patients with cancer. On the same day, AbbVie and Calico entered into an R&D collaboration intended to discover, develop and bring to market new therapies for patients with diseases of ageing, including neurodegeneration and cancer. In 2014, AbbVie ended its efforts to acquire Shire, a major M&A deal and one of the largest tax inversions in history. In 2015, AbbVie announced its agreement to acquire Pharmacyclics and its blood cancer treatment, ibrutinib, for approximately $21 billion. The acquisition was completed on May 26, 2015, and the Pharmacyclics name was retained. The company operated as a subsidiary until the consolidation of AbbVie Bay Area sites in a new building in South San Francisco. In June 2015, AbbVie and Halozyme Therapeutics entered into a global collaboration and licensing agreement to develop and commercialize products combining AbbVie's treatments and Halozyme's ENHANZE drug-delivery technology. This agreement was terminated in November 2016.

On 28 April 2016, the company announced it would acquire Stemcentrx for up to $9.8 billion. A day later, the company announced an expansion of a cystic fibrosis deal with Galapagos NV, potentially doubling milestone payments to $600 million. On 25 June 2019, AbbVie announced it would acquire Irish-based Allergan plc for about $63 billion; however, the transaction would not be structured as a tax inversion, and post the transaction, AbbVie would remain legally domiciled in the U.S. for tax purposes. The company divested certain assets to gain FTC approval. In July 2019, the company announced it would acquire Mavupharma, boosting its cancer drug pipeline. In May 2021, Allergan Aesthetics announced the acquisition of Soliton. In June, Abbvie acquired TeneoOne and its lead compound TNB-383B. The compound is a BCMA-targeting immunotherapeutic for relapsed or refractory multiple myeloma. In March 2022, AbbVie acquired Syndesi Therapeutics for up to $1 billion and its portfolio of novel modulators of the synaptic vesicle protein 2A and lead compound SDI-118. In October, the company acquired DJS Antibodies for $225 million, giving it access to an experimental drug for aggressive lung disease as well as technology to develop certain antibody medicines. In November 2023, AbbVie announced it would be buying ImmunoGen for $10.1 billion, aiming to expedite its entry into the ovarian cancer treatment market with ImmunoGen's drug Elahere. The deal, which is subject to approval by ImmunoGen shareholders and regulators, is expected to close in mid-2024. In December 2023, AbbVie announced that it would acquire neuroscience drugmaker Cerevel Therapeutics for $8.7 billion in an attempt to expand its drug pipeline. The company expects to complete the acquisition in the middle of 2024.

AbbVie Pharmaceuticals has faced multiple legal accusations, including a $2.37 billion settlement in July 2022 to settle U.S. lawsuits against its Allergan unit over opioid marketing. The company denied any wrongdoing, but its stock fell 6% following an earnings report that included a $2.2 billion charge related to the opioid deal. AbbVie has also been accused of using anti-competitive patent thickets to prevent cheaper biosimilars from entering the market. The company is currently involved in a legislative battle against Icelandic Alvotech, which is trying to bring a Humira biosimilar to market. AbbVie has also been accused of using unlawful deals to prevent generic versions of its Alzheimer's disease drug, Namenda, from entering the market.