AbbVie Inc., the drugmaker carved out of Abbott Laboratories at the start of the year, reported profit that beat analysts’ estimates and raised its 2013 forecast after sales of top medicine Humira gained on price increases and new indications.
Earnings, excluding one-time items, of 82 cents a share topped by 3 cents the average of 10 analysts’ estimates compiled by Bloomberg. Full-year profit is expected to be $3.07 to $3.13 a share, the Abbott Park, Illinois-based company said in a statement today. Its previous outlook was for profit of at least $3.03 a share.
“Our first-half performance, including better-than-expected sales growth, has allowed us to increase our earnings-per share guidance for the year,” Richard Gonzalez, AbbVie’s chief executive officer, said in the statement.
Humira sales increased 12 percent to $2.61 billion. The rheumatoid arthritis drug is the backbone of the company. AbbVie’s roster of experimental medicines, though, may not be getting enough credit, said Jami Rubin, an analyst with Goldman Sachs Group Inc. who has a buy rating on the stock. “We think the under-appreciated pipeline may lead to a valuation re-rate,” she said in a July 11 note to clients.
AbbVie was created when Abbott split in half, leaving AbbVie with the brand drugs and Abbott with the medical devices, diagnostics, nutrition and generics lines. AbbVie shares have gained 31 percent since the separation on Jan. 1, compared with a 24 percent increase for the 24-member Bloomberg Americas Pharmaceutical Index. The stock rose 1.2 percent to $44.79 at the close in New York.
AbbVie is reorienting the company’s focus on new drug lines, shifting away from primary care medicines into specialty treatments for immune, cancer and viral conditions.
The drugmaker’s most-promising experimental products are in hepatitis C, a viral liver disease, and cancer. The hepatitis C treatment is a combination of pills that if approved probably will compete with Gilead Sciences Inc.’s experimental therapy. The new products don’t rely on shots of interferon, which come with flu-like side effects.
“It’s a very tight race, but we’re feeling very, very good about our position,” Scott Brun, AbbVie’s head of research and development, said today on a conference call.
The company will be pouring resources into the debut of the hepatitis C drug, Gonzalez said. “There will be a fair amount of pent-up demand, so we’re building up all the assets we need to have an aggressive launch,” Gonzalez said on the call.
The hepatitis C combination treatment “has been overlooked,” Rubin said. Investors are also closely watching ABT-199, a cancer medicine being studied in leukemia and lymphoma, may be on the market in 2016, according to the company.
AbbVie’s under-appreciated pipeline is part of a trend across the industry, where after several years of losing drugs to patent expiries new therapies in development will begin to pay off, said Timothy Anderson, an analyst with Sanford C. Bernstein & Co.
“There are some signs that new drug pipelines may be slowly improving which is perhaps the most important trend to watch,” he said in a July 15 note to clients. “By the end of 2013, the financial impact from biggest bolus of patent expirations will have lapsed. Coupled with the fact that the industry continues to ‘right-size’ itself, the majority of our companies seem capable of returning to some modest level of longer-term growth.”
Profit from continuing operations rose 2.2 percent to $1.45 billion, or 66 cents a share, from $1.42 billion, or 80 cents, a year earlier, the company said. Net income declined 16 percent to $1.07 billion, while revenue gained 4.4 percent to $4.69 billion.
Success with those products would diversify the company’s sales beyond Humira, which made up 50 percent of revenue last year. AbbVie has also sought new uses for Humira with new indications in the U.S. for other immune system and inflammatory diseases, including psoriasis and ulcerative colitis.