4 Reasons to Own AbbVie Stock as Coronavirus Woes Linger

The coronavirus pandemic has significantly hurt economic growth, hitting some industries harder than the others. While economic damage to the retail, restaurants, gaming, transportation and travel industries has been the maximum, the impact on the drug and biotech sector has been relatively softer. In fact, all eyes are on this sector to find a cure/vaccine for the deadly COVID-19 disease and bring an end to the global economic catastrophe. The drug and biotech sector is a good sector to invest in right now. In this defensive sector, AbbVie, Inc. ABBV appears to be a solid bet. Here are some reasons to invest in the stock now

Good Rank and Rising Estimates: AbbVie has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its earnings estimates have risen by almost 5% for 2020 and 5.4% for 2021 over the past 60 days. This year so far, though AbbVie’s shares have risen 11.6%.

AbbVie Inc. Price and Consensus

 

AbbVie Inc. Price and Consensus

AbbVie Inc. price-consensus-chart | AbbVie Inc. Quote

Allergan Deal Added A Successful Product, Botox:  AbbVie has become one of the top-most pharma companies with the acquisition of Botox maker, Allergan for $63 billion this year. The deal has transformed AbbVie’s portfolio and lowered its dependence on Humira, its flagship product, which has already lost patent protection in Europe and is due to face biosimilar competition in the United States in 2023.

Approved for therapeutic and aesthetic use, Botox was a key top-line driver for Allergan and looks fit to be the next revenue driver for AbbVie after Humira loses exclusivity. Overall, the Allergan acquisition should diversify AbbVie’s revenue base to markets/categories outside its present drug portfolio and accelerate its non-Humira business.

Successful Label Expansion of Imbruvica and Venclexta: AbbVie has built a substantial oncology franchise with Imbruvica and Venclexta, which generated combined revenues of nearly $5.5 billion in 2019. Strong double-digit growth is expected in 2020. Imbruvica, currently approved for quite a few indications, has multi-billion dollar potential and AbbVie is exploring the potential to expand Imbruvica’s label into solid tumors and autoimmune diseases. Several studies on Imbruvica are ongoing to evaluate the drug alone or in combination in different patient segments. AbbVie is also studying Venclyxto/Venclexta to expand the label to address the broader relapsed/refractory CLL patient population, expand into earlier lines of therapy, and broaden into other hematologic malignancies like multiple myeloma and AML. AbbVie expects to begin a phase III study on Venclexta in myelodysplastic syndrome or MDS in 2020. Label expansion approvals in the past couple of years have expanded the eligible patient population of Venclexta significantly, which is boosting sales from the drug. AbbVie markets Imbruvica in partnership with J&J JNJ and Venclexta with Roche RHHBY.

Key New Drugs to Drive Long-Term Growth: Key recent FDA approvals include that of Orilissa (elagolix) for management of pain associated with endometriosis, a common gynecologic disorder in July 2018, Skyrizi (risankizumab) for plaque psoriasis in April 2019 and Rinvoq (upadacitinib) for moderate-to-severe rheumatoid arthritis (RA) in August 2019. Skyrizi and Rinvoq have demonstrated differentiated clinical profiles versus Humira and are expected to lower AbbVie’s dependence on Humira. Importantly, Skyrizi and Rinvoq are off to strong starts and AbbVie expects combined revenues of these two drugs to be approximately $1.9 billion in 2020.In 2020, AbbVie gained FDA approval for Oriahnn/elagolix for reducing heavy menstrual bleeding (HMB) in premenopausal women with uterine fibroids.

In fact, AbbVie expects to launch more than 20 new products or line extensions of marketed drugs before Humira biosimilar competition begins in the United States in 2023.

Conclusion

Sales erosion due to direct biosimilar competition to Humira in international markets is a big headwind. Also, AbbVie’s global HCV sales declined almost 18% on an operational basis in 2019, primarily driven by lower patient volumes in certain international markets and competitive dynamics in the United States. Nonetheless, strong demand trends of Humira in the United States, a strong portfolio of new drugs and continued strong sales performance of Imbruvica and Venclexta are some solid reasons to own the stock.

Another stock with the same Zacks Rank as AbbVie is Eli Lilly & Company LLY. Lilly’s shares have risen 24.7% this year so far.

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