Don’t Blame AbbVie Inc (ABBV) for Humira’s Success

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Flip to the 2012 financial results for AbbVie Inc (NYSE:ABBV) and you’ll see that its best-selling drug, Humira, brought in $9.27 billion in 2012, or 51% of the company’s total revenue. AndroGel, soon to be the second-best-selling drug, reeled in just $1.19 billion in sales. First place never seemed so far away.

Such an eye-popping dependence on one drug gives investors the right to be concerned about AbbVie Inc (NYSE:ABBV)’s susceptibility to volatility. Humira may have double-digit growth ahead of it for 2013, but most of the gains are expected to offset declines from other top drugs. Do investors own the right to hit the panic button?

AbbVie Inc (NYSE:ABBV)Humira hubris?
Obviously, investors aren’t mad at AbbVie Inc (NYSE:ABBV) for wielding a $10 billion product. Think about it — the drug provides most of the cash flow for the dividend and supports a massive chunk of the company’s market cap. But investors shouldn’t blame the company indirectly for the immunology drug’s wild success either. Consider that even if AndroGel tripled its sales next year (just for argument’s sake) Humira would still outsell it three to one. Translation: aAny number looks small compared to $10 billion.

To illustrate that point further, let’s try another fun experiment. If we take the top drugs of other big pharma companies out of their lineup and insert Humira, they, too, would have been overwhelmingly dependent on the drug in 2012. For instance, Bristol Myers Squibb Co. (NYSE:BMY) would have depended on Humira for 38.5% of its sales if we swapped out Abilify.

Company Top-selling drug, % of total 2012 sales Humira swap, % of total 2012 sales No. 2 drug, % of total 2012 sales
Bristol Myers Squibb Co. (NYSE:BMY) Abilify, $2.83 billion, 16% $9.27 billion, 38.5% Sustiva, 6.35%
Johnson & Johnson (NYSE:JNJ) Remicade, $6.14 billion, 24% $9.27 billion, 36.5% Velcade, 5.92%
Merck & Co., Inc. (NYSE:MRK) Januvia/Janumet, $5.74 billion, 14% $9.27 billion, 26.6% Zetia, 7.36%

Source: Company earnings releases. Note: Last column accounts for Humira swap.

This isn’t meant to bring the other companies down; it’s just meant to be a simple way to illustrate that Humira would pose similar challenges to others pharmaceutical firms. I’ll be honest; I don’t know much about Bristol, but Johnson & Johnson and Merck have pretty robust product lineups and pipelines. So in terms of marketed drugs, AbbVie Inc (NYSE:ABBV) is at least one step below its peers. In fact, it is possible that the company will not have a blockbuster outside of Humira and AndroGel at the end of 2013. Ouch.

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