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AbbVie Posts Solid Quarter With Remarkably Strong Growth From Next-Generation Immunology Drugs AbbVie Posts Solid Quarter With Remarkably Strong Growth From Next-Generation Immunology Drugs Damien Conover Sector Director Analyst Note | by Damien Conover Morningstar AbbVie reported fourth-quarter results largely in line with our expectations, and we don't expect any major changes to our fair value estimate. We continue to view the stock as undervalued with the market not fully appreciating the firm's next-generation drugs. We feel the balance of new drugs offsetting the large hole left by the end of exclusivity of immunology drug Humira (ongoing biosimilar launches internationally and expected in 2023 in the U.S.) supports a narrow moat. In the quarter, 5% operational sales growth was largely supported by remarkably strong new immunology drug growth and continued strength of hematology drugs, both offsetting falling international Humira and global hepatitis C sales. We largely expect these trends to continue in 2020 with the international biosimilar pressures on Humira further eroding sales. Also, we believe the market opportunity for hepatitis C drugs is shrinking due to the curative nature of the drugs. However, psoriasis drug Skyrizi and rheumatoid arthritis drug Rinvoq are posting very strong growth. The 2020 guidance of $1.7 billion for combined sales of the drugs looks achievable based on leading efficacy and favorable market positioning supported by AbbVie's strong entrenchment with Humira in related indications. On the pipeline side, AbbVie continues to make strong progress with a heavy focus on expanding indications for currently marketed drugs. In particular, we expect 2021 approvals for Rinvoq in atopic dermatitis, psoriatic arthritis, and ankylosing spondylitis to more than double the market potential for the drug. Also, we expect Imbruvica to expand leukemia approvals into broader patient populations, including younger more fit patients in 2020. Lastly, the likely 2020 approval of Orilissa in uterine fibroids opens a much larger potential market. Turning to the acquisition of Allergan, the deal remains on track to close by the end of the first quarter. We don't expect the closing to impact our valuation. |
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