Will Testosterone Fuel Biotech’s Next Great Race? – AbbVie Inc (ABBV), Eli Lilly & Co. (LLY)

Auxilium Pharmaceuticals, Inc. (NASDAQ:AUXL) enjoyed more success than Eli Lilly & Co. (NYSE:LLY) with its 1% testosterone gel Testim, which generated $233 in sales last year. Still, sales of the company’s TRT only grew 8% compared to 2011. AndroGel grew 31% in 2012. It appears that Perrigo’s generic version of AndroGel poses the biggest risk to AbbVie.

Worst-case scenario
Let’s be honest — a lot of things need to go wrong for AndroGel to fall from the leaderboard or not be the market’s top-selling drug. AbbVie’s targeted marketing campaign has vaulted its TRT well ahead of competing therapies. A more likely scenario would be for growth to slow in the face of a bigger field. In that case, the timing couldn’t be worse.

AbbVie is already banking on sales growth from Humira and AndroGel to offset declining drug revenue elsewhere through 2015. By then, the first new pipeline drugs are expected to kick in. If the company’s vision of its future is off by just one or two drugs, AbbVie could be headed downhill — even for just a short time — when 2015 arrives.

Foolish bottom line
Can AbbVie defend its turf and continue to gain the lion’s share of the growth in TRTs? Yes, and it may be able to do so relatively easily. If the market more than doubles by 2017 — as analysts expect — there will be more than enough room to accommodate a multitude of therapies. I just wouldn’t be so quick to write-off the generic challenge from Perrigo and other maturing products if I was an AbbVie investor. It is a question mark that has yet to be fully accounted for in any growth models or scenarios I have viewed.

The article Will Testosterone Fuel Biotech’s Next Great Race? originally appeared on Fool.com.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and emerging technologies.The Motley Fool has no position in any of the stocks mentioned.

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