Is AbbVie’s Dividend Capable Of Long-Term Growth?
Nearly 20 years ago on Dec. 15, 2000, medical device and pharmaceutical maker Abbott Laboratories (NYSE: ABT) announced its $6.9 billion acquisition of Knoll Pharmaceuticals, a subsidiary of chemical giant BASF. At that time, no one knew that Knoll housed a drug, still in clinical development, that would one day become the world's largest selling drug.
Then in 2013, Abbott Labs split its company in two. The medical device side retained the name Abbott Labs and the pharmaceutical business was spun-off to shareholders and the new company was named AbbVie (NYSE: ABBV). The aforementioned drug was called D2E7 by Knoll, and generically known as adalimumab, but better know as Humira, generated $19.9 billion in global sales last year and was the world's best-selling drug. Humira is a subcutaneous injection used to treat a variety of diseases including rheumatoid arthritis, psoriatic arthritis, plaque psoriasis, Crohn's disease, ulcerative colitis, and ankylosing spondylitis among others. Humira's sales accounted for 60% of AbbVie's revenue in 2018.
Humira was approved in the U.S. in 2002. Last year, U.S. sales of Humira were $13.7 billion, or roughly 42% of AbbVie's total global sales. Humira is set to lose U.S. patent protection in 2023, which will likely precipitate a significant drop in profits. Another $6.3 billion of Humira sales (19% of total sales) was generated outside the U.S. Late last year, biosimilars of Humira (generic biologics) were approved in Europe. The impact of these generics entering the market can be seen in AbbVie's third-quarter earnings release which showed international sales of Humira declining by 32%. AbbVie realized it would have a significant problem in 2023 when U.S. Humira biosimilars are scheduled to launch.
Source Fool.com
