Frankfurt The German pharmaceutical industry has a long tradition in immunology – and is still very efficient when it comes to researching new medicines. Commercially, two US companies are currently benefiting from this. Industry leader Pfizer generated sales of almost $38 billion last year with the Comirnaty corona vaccine researched by Biontech.
Drugs from German research against diseases of the immune system also play a major role for Abbvie, the world’s number two in terms of sales. This is shown by the latest figures and forecasts from Abbvie management.
For more than a decade, the company’s business has been driven primarily by the drug Humira, which was originally developed by BASF. The biotechnically produced remedy for various autoimmune diseases such as rheumatism, psoriasis and Crohn’s disease recently achieved annual sales of a good 21 billion dollars.
After the US patent for Humira expired a few weeks ago, sales of the blockbuster will shrink significantly. But with the psoriasis drug Skyrizi, Abbvie has already established a successful successor product, which also comes from the laboratory of a German pharmaceutical manufacturer. In this case, it is a new development from Boehringer Ingelheim, for which Abbvie acquired the worldwide distribution rights in 2016.
This product is also proving to be a huge success and a potential mega blockbuster for Abbvie: just three years after it was first approved, the group already achieved sales of 5.2 billion dollars last year with the preparation from Ingelheim. Humira and Skyrizi together accounted for around 45 percent of total revenue last year.
The US group benefits greatly from drugs developed in Germany.
While Humira’s sales are expected to fall by more than a third to $13.4 billion this year due to competition from generic drugs, Abbvie is forecasting another sales increase of more than 40 percent to $7.4 billion for Skyrizi.
Boehringer is benefiting from the success, albeit not as much as its US partner. When the cooperation was concluded almost seven years ago, Abbvie paid almost 600 million dollars to the Germans. In addition, Boehringer receives license fees of around 20 percent of sales and success-related milestone payments. For 2022 Abbvie is likely to have transferred a good one billion dollars to Ingelheim, for 2023 the US group calculates payments of 1.4 billion dollars.
The Abbvie expects high growth rates from its two new blockbuster drugs.
(Photo: AbbVie)
Together with new rheumatism drug Rinvoq, Skyrizi forms a cornerstone of Abbvie’s strategy to quickly return its important immunology business to growth. “We expect these two products to surpass Humira’s past peak sales beginning in 2027 and continue to grow strongly through the end of the decade,” Abbvie CEO Rick Gonzalez told analysts a few days ago.
Similar to Humira, the two new developments work by blocking certain messenger substances of the immune system and in this way stopping or dampening harmful inflammatory processes.
In the current year, however, they will not be able to protect Abbvie from a sales dip due to the Humira patent expiry. Analysts expect a drop in sales of more than six percent for the entire group in the current year. But as early as 2024, according to estimates, the group could turn to a new growth phase thanks to Skyrizi, among other things.
Humira came into the group through the takeover of the BASF pharmaceuticals division
Humira, meanwhile, has proven to be a paragon of how a single best-selling product can pave the way to the top tier of pharmaceuticals. Abbvie’s rigid patent strategy also helped, with the help of which counterfeit products on the US market could be warded off much longer than in Europe.
The drug was developed by BASF in the 1990s and was in the final stages of clinical trials when the US group Abbott Laboratories took over the entire pharmaceuticals division of the Ludwigshafen-based company for $7.2 billion in 2001. A good decade later, Abbott spun off its pharmaceutical business as an independent company.
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The new pharmaceutical company Abbvie then used the enormous profits from the Humira business to expand its research. There were also various takeovers, including the biotech company Pharmacyclics and the Botox manufacturer Allergan, each for tens of billions. In addition to immunology, Abbvie’s research is now also heavily involved in the development of drugs for cancer and neurological diseases such as Alzheimer’s and Parkinson’s.
Humira has generated total sales of approximately $215 billion in the two decades since its initial approval in 2002, making it the most commercially successful compound in the history of the pharmaceutical industry. The drug is now approved for around a dozen so-called autoimmune diseases, in which an overactive immune system attacks the body’s own tissue, such as skin cells (psoriasis), the intestinal walls (Crohn’s disease) or joint tissue (rheumatism).
Abbvie: Stock market value more than quadrupled after spin-off
With Rinvoq and Skyrizi, Abbvie now intends to cover the entire spectrum of Humira’s applications and gain market share over established competing products with improved clinical results. Skyrizi, for example, is now also approved for a form of arthritis and Crohn’s disease. It is also tested against ulcerative colitis, an autoimmune disease of the colon.
Abbvie has also launched a series of comparative studies designed to demonstrate superiority over key competing products. “They will continue to demonstrate that Skyrizi is the best product in its drug category for these indications,” said Abbvie Research Director Tom Hudson.
The prospect that Abbvie, thanks to Skyrizi and a few other products, will ultimately be able to cope well with Humira’s huge patent expiry also gives the group support on the stock market. The stock is currently trading 14 percent below its all-time high from last April. Since the spin-off from Abbott, however, sales have tripled and the stock market value has more than quadrupled.
In terms of market capitalization, Abbvie is currently number five in the industry at $267 billion, behind Merck & Co and ahead of Pfizer. However, when you add Abbott and Abbvie together, the market cap is more than $450 billion. This means that in the old structure, the value would have increased more than fivefold since the purchase of the BASF pharmaceutical business; Abbott would probably be the highest-rated company in the pharmaceutical industry today.
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