01—Abstract
Summary
Summary of the 10-K filed February 16, 2018. Cited figures are marked; the original filing is the authoritative source.
AbbVie Inc.'s 2017 Form 10-K reveals a year of significant revenue growth, primarily driven by the continued strong performance of its flagship drug, HUMIRA, which accounted for approximately 65%a of total net revenues.
The company reported worldwide net revenues of $28.2 billionb, a 10% increase year-over-year (on a constant currency basis), bolstered by growth from IMBRUVICA and new product launches like MAVYRET. AbbVie also demonstrated robust cash flow from operations, which was utilized for pipeline investment, dividend payments, and share repurchases.
Key areas of focus for investors include the company's substantial investment in research and development ($5.0 billionc in 2017) across immunology, oncology, and neurology, with over 60 compounds in clinical development. Investors should also note the upcoming patent expirations for key products, particularly HUMIRA, which faces biosimilar competition, and the company's strategic efforts to manage this through pipeline innovation and market differentiation.
02—Key points
Key Highlights
- AbbVie reported $28.2 billion in worldwide net revenues for 2017, an increase of 10% on a constant currency basis, largely driven by HUMIRA and strong growth in IMBRUVICA.
- HUMIRA remains the dominant revenue contributor, accounting for approximately 65% of total net revenues ($18.4 billion), showing continued growth.
- IMBRUVICA demonstrated significant growth, with worldwide sales increasing by 40% to $2.57 billion, driven by new indications and market penetration.
- The company invested $5.0 billion in research and development in 2017, focusing on key therapeutic areas including immunology, oncology, and neurology, with over 60 compounds in clinical development.
- AbbVie returned value to shareholders through $4.1 billion in cash dividends and $1.0 billion in share repurchases during 2017.
- A significant risk factor is the upcoming patent expiration for HUMIRA in Europe (October 2018), with the U.S. composition of matter patent having expired in December 2016, increasing potential exposure to biosimilar competition.
- The company experienced a substantial impact from U.S. tax reform, including a one-time mandatory repatriation tax charge of $4.5 billion and a related tax benefit from deferred tax remeasurement.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, AbbVie Inc. kept $0.19.
- Revenue$28.22B100.0%
- Cost of revenue−$7.04B25.0%
- Gross profit$21.18B75.0%
- Operating costs−$11.63B41.2%
- Operating income$9.54B33.8%
- Interest, other & tax−$4.24B15.0%
- Net income$5.31B18.8%
Where FY2017 revenue went
$28.22B- Cost of revenue: $7.04B, 25% of revenue
- SG&A: $6.29B, 22% of revenue
- Other operating costs: $5.34B, 19% of revenue
- Net income: $5.31B, 19% of revenue
- Interest, other & tax: $4.24B, 15% of revenue
Kept 19% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 16, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $28.22B$25.64B | +10.1% |
| Cost of Revenue | $7.04B$5.83B | +20.7% |
| Gross Profit | $21.18B$19.80B | +6.9% |
| SG&A Expenses | $6.29B$5.88B | +7.0% |
| Operating Expenses | $18.67B$16.30B | +14.6% |
| Operating Income | $9.54B$9.34B | +2.2% |
| Interest Expense | $1.15B$1.05B | +9.8% |
| Net Income | $5.31B$5.95B | −10.8% |
| EPS (Basic) | $3.31$3.65 | −9.3% |
| EPS (Diluted) | $3.30$3.63 | −9.1% |
| Shares Outstanding (Basic) | 1.60B1.62B | −1.6% |
| Shares Outstanding (Diluted) | 1.60B1.63B | −1.7% |
05—Questions
Frequently Asked Questions
What was AbbVie's financial performance in 2017?
AbbVie reported worldwide net revenues of $28.2 billion, a 10% increase (on a constant currency basis) compared to 2016. Diluted earnings per share were $3.30. The company generated $10.0 billion in cash flow from operations, which was used for R&D, dividends, and share repurchases.
How significant is HUMIRA to AbbVie's revenue?
HUMIRA was AbbVie's largest product in 2017, accounting for approximately 65% of total net revenues, which amounted to $18.4 billion. While HUMIRA continues to show strong growth, its significant contribution also highlights the company's reliance on this single product.
What are AbbVie's key growth drivers and pipeline focus areas?
Beyond HUMIRA, AbbVie's key growth driver is IMBRUVICA, which saw a 40% increase in sales in 2017. The company is heavily invested in R&D ($5.0 billion in 2017), with a strong pipeline focusing on immunology, oncology, and neurology, including promising candidates like upadacitinib and risankizumab.
What are the major risks facing AbbVie?
A significant risk highlighted is the upcoming patent expiration for HUMIRA, particularly in Europe in October 2018, which could lead to increased competition from biosimilars. The company also faces risks related to the success of its R&D pipeline, potential regulatory changes, and product liability claims.
06—Continue