Health

Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

AbbVie Inc. has gotten some wins lately. But it may be guilty of over-celebrating.

The company provided boosted long-term sales forecasts last week, commemorating strong third-quarter sales of its lead drug Humira and a deal with Amgen Inc. that will protect the drug's future. But as we've seen this earnings season, forecast overreach can come back to bite.  

Breaking AbbFree
The likely long-term safety of its lead medicine has boosted AbbVie shares
Source: Blooomberg

Abbvie previously expected Humira sales to exceed $18 billion in 2020; it now expects that number to approach $21 billion. That's ambitious, but not absurd.

AbbVie's forecasts go off the rails for its other medicines, though. It expects its non-Humira drugs to account for more than $35 billion in sales 2025, adjusting for the risk of negative impacts like trial failure over time, and as much as $47 billion in nominal (not risk-adjusted) sales.

Juicy
AbbVie expects meteoric growth from its newer and in development medicines through 2025
Source: AbbVie
*AbbVie's expectation is for more than $35 billion in ex-Humira sales in 2025

To put that in context, AbbVie expects to add a new major pharma company's worth of revenue over the next eight years, without what is currently the best-selling medicine in the world. Its "risk-adjusted" estimate is just short of the revenue GlaxoSmithKline PLC generated last year. Its blue-sky number is creeping up on Novartis AG, the world's second-most-valuable drugmaker. 

Grandiose
AbbVie's estimates would see it add a whole pharma company worth of revenue over the next 8 years
Source: AbbVie/Bloomberg

It's not just the overall figure that is questionable. AbbVie slides suggest nominal U.S. sales of its blood-cancer medicine Imbruvica could be as high as $11.5 billion in 2025. Less than a week after the company made this prediction, the FDA approved AstraZeneca PLC's Calquence, effectively a second-generation Imbruvica that will eat at the long-term sales potential of AbbVie's medicine. AbbVie's forecast likely includes some degree of success for five different efforts to extend Imbruvica's treatment to earlier stages of cancer or different diseases, which is inherently risky. 

AbbVie's suggestion of $6 billion in potential 2025 sales for Venclexta, another blood-cancer medicine, likely anticipates some success for extensions into six additional patient groups. The analyst consensus sales forecast for the medicine in 2022 -- the last year for which multiple forecasts are available -- is $1.4 billion. The market to treat blood cancers is highly competitive and will grow more so over the next eight years. 

Blue Skies
AbbVie has some pretty sky-high sales hopes for several of its medicines
Source: AbbVie

Another big component of AbbVie's hopes are two in-development inflammation medicines, upadacitinib and risankizumab. These are heading into an even tougher environment, with several on-market and in-development competitors in all the conditions they're intended to treat. Cheaper versions of the current blockbusters in this market will become available over time, adding additional price pressure. All of that increases the chances these drugs will have difficult launches and lower sales peaks. 

AbbVie is also talking up Rova-T, a medicine it picked up with its $5.8 billion purchase of Stemcentrx last year, projecting $5 billion in peak sales potential. But early trial results from the drug in lung cancer weren't hugely impressive. As with many of AbbVie's other assets, analysts expectations are more muted; the consensus 2022 sales estimate is $1.2 billion. 

AbbVie is far from the only company with very high hopes for its medicine. And you can't blame it for trying to talk up its valuation a bit; AbbVie trades at a consistent discount to several competing firms. But the company is going a bit too far and risks an embarrassing walk-back at some point in the future.   

Behind
Even after a recent share price poost, AbbVie trades at a discount to its large U.S. rivals
Source: Bloomberg

AbbVie is on track to exceed several forecasts it made in 2015, which is impressive. But don't expect the same for its 2025 numbers.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Max Nisen in New York at mnisen@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net