01—Abstract
Summary
Summary of the 10-K filed February 17, 2017. Cited figures are marked; the original filing is the authoritative source.
AbbVie Inc.'s 2016 10-K filing reveals a company experiencing robust revenue growth, primarily driven by its flagship product, HUMIRA, which constituted 63%a of total net revenues.
Significant strategic moves in 2016 included the acquisition of Stemcentrx for approximately $5.8 billionb, aimed at bolstering its oncology pipeline with assets like Rova-T. The company also saw substantial growth in IMBRUVICA, following its acquisition of Pharmacyclics, indicating a strengthening position in oncology. Despite revenue growth, AbbVie faced challenges including increased R&D expenses, a notable rise in long-term debt due to acquisitions and financing activities, and ongoing patent expirations, particularly for HUMIRA, which is subject to biosimilar competition and whose composition of matter patent expired in December 2016.
The company is actively managing these challenges by investing in its pipeline and returning value to shareholders through dividends and share repurchases. Looking ahead, AbbVie is focused on continued growth from its key products, expanding operating margins through efficiency initiatives, and augmenting its pipeline via strategic licensing and acquisitions.
The company anticipates several regulatory submissions and key data readouts in the near future. Investors should monitor the impact of HUMIRA's patent expiry and the competitive landscape, particularly regarding biosimilars, as well as the successful integration and commercialization of recently acquired assets.
02—Key points
Key Highlights
- AbbVie reported total net revenues of $25.6 billion in 2016, a 12.2% increase year-over-year, largely driven by HUMIRA and IMBRUVICA.
- HUMIRA remained the dominant revenue driver, accounting for 63% of total net revenues ($16.1 billion).
- The company acquired Stemcentrx for approximately $5.8 billion to expand its oncology pipeline, adding Rova-T and other early-stage assets.
- IMBRUVICA sales showed significant growth, more than doubling in 2016, driven by new indications and market share gains.
- Research and Development expenses increased to $4.4 billion in 2016, reflecting continued investment in pipeline advancement.
- AbbVie's long-term debt increased significantly to $36.5 billion, primarily due to debt issued to finance major acquisitions like Pharmacyclics and Stemcentrx.
- The composition of matter patent for HUMIRA expired in December 2016, posing a potential future risk from generic or biosimilar competition.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, AbbVie Inc. kept $0.23.
- Revenue$25.64B100.0%
- Cost of revenue−$5.83B22.8%
- Gross profit$19.80B77.2%
- Operating costs−$10.46B40.8%
- Operating income$9.34B36.4%
- Interest, other & tax−$3.39B13.2%
- Net income$5.95B23.2%
Where FY2016 revenue went
$25.64B- Net income: $5.95B, 23% of revenue
- SG&A: $5.88B, 23% of revenue
- Cost of revenue: $5.83B, 23% of revenue
- Other operating costs: $4.58B, 18% of revenue
- Interest, other & tax: $3.39B, 13% of revenue
Kept 23% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 17, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $25.64B$22.86B | +12.2% |
| Cost of Revenue | $5.83B$4.50B | +29.6% |
| Gross Profit | $19.80B$18.36B | +7.9% |
| SG&A Expenses | $5.88B$6.39B | −7.9% |
| Operating Expenses | $16.30B$15.32B | +6.4% |
| Operating Income | $9.34B$7.54B | +23.9% |
| Interest Expense | $1.05B$719.00M | +45.6% |
| Net Income | $5.95B$5.12B | +16.3% |
| EPS (Basic) | $3.65$3.15 | +15.9% |
| EPS (Diluted) | $3.63$3.13 | +16.0% |
| Shares Outstanding (Basic) | 1.62B1.63B | −0.2% |
| Shares Outstanding (Diluted) | 1.63B1.64B | −0.4% |
05—Questions
Frequently Asked Questions
What was AbbVie's revenue performance in 2016, and what were the main drivers?
AbbVie's total net revenues reached $25.6 billion in 2016, an increase of 12.2% compared to the previous year. This growth was primarily fueled by strong performance from its flagship product, HUMIRA, and significant revenue growth from IMBRUVICA, boosted by new indications and market share gains.
What were the key strategic acquisitions made by AbbVie in 2016?
In 2016, AbbVie made a significant strategic move by acquiring Stemcentrx for approximately $5.8 billion. This acquisition aimed to strengthen AbbVie's oncology portfolio by adding late-stage assets like rovalpituzumab tesirine (Rova-T) and other early-stage compounds.
What is the impact of HUMIRA's patent situation on AbbVie?
The composition of matter patent for HUMIRA expired in December 2016 in the United States. While HUMIRA is a biologic and not a traditional small molecule drug, making direct substitution more complex, the company faces potential future competition from biosimilars. The company is also working on formulation and delivery enhancements for HUMIRA to maintain its market position.
How did AbbVie finance its major acquisitions, and what is the impact on its debt?
AbbVie financed its major acquisitions, including Pharmacyclics and Stemcentrx, through a combination of cash and debt. This resulted in a substantial increase in long-term debt, reaching $36.5 billion by the end of 2016, reflecting significant debt issuances to fund these strategic transactions.
06—Continue