01—Abstract
Summary
Summary of the 10-K filed February 27, 2019. Cited figures are marked; the original filing is the authoritative source.
AbbVie Inc.'s 2018 Form 10-K highlights a year of significant revenue growth, driven by its immunology and oncology portfolios.
Total net revenues reached $32.8 billiona, a 16% increase, largely propelled by strong performance from HUMIRA, IMBRUVICA, and MAVYRET, alongside continued growth from VENCLEXTA. Despite robust top-line growth, the company faced a substantial intangible asset impairment charge related to its Stemcentrx acquisition, impacting net earnings. AbbVie demonstrated a commitment to shareholder returns through increased dividends and significant share repurchases.
The company is actively managing the impact of HUMIRA's biosimilar competition in Europe and anticipates continued diversification of its revenue streams through pipeline advancements in immunology, oncology, and neuroscience. Looking ahead, AbbVie is focused on driving further pipeline progression and expanding into new therapeutic areas. Management emphasized continued investment in key growth brands and the advancement of new medicines.
Key risks highlighted include the ongoing expiration of patent protection, potential biosimilar competition, and the inherent uncertainties in research and development. The company's financial health remains strong, supported by substantial operating cash flows and a solid credit facility, though it continues to navigate pricing pressures and regulatory complexities in the pharmaceutical industry.
02—Key points
Key Highlights
- AbbVie reported total net revenues of $32.8 billion in 2018, a 16% increase year-over-year, driven by strong performance across its key therapeutic areas.
- HUMIRA remained the largest revenue contributor, accounting for approximately 61% of total net revenues, with continued growth in the US, though facing biosimilar competition internationally.
- Significant growth was seen in the oncology portfolio, with IMBRUVICA revenues up 39% and VENCLEXTA revenues more than doubling, indicating strong market penetration.
- The company incurred a substantial pre-tax intangible asset impairment charge of $5.1 billion related to the Stemcentrx acquisition, significantly impacting net earnings for the year.
- AbbVie returned significant value to shareholders, increasing its quarterly cash dividend by 11.5% and repurchasing approximately $10.7 billion of its common stock.
- The company faces ongoing patent expiration risks, particularly for HUMIRA, and notes that biosimilar competition in Europe has begun, with US biosimilar competition not expected until 2023.
- AbbVie is actively investing in its R&D pipeline, with over 60 compounds/indications in clinical development, focusing on immunology, oncology, and neuroscience.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2018, AbbVie Inc. kept $0.17.
- Revenue$32.75B100.0%
- Cost of revenue−$7.72B23.6%
- Gross profit$25.04B76.4%
- Operating costs−$18.65B56.9%
- Operating income$6.38B19.5%
- Interest, other & tax−$696.0M2.1%
- Net income$5.69B17.4%
Where FY2018 revenue went
$32.75B- Other operating costs: $11.25B, 34% of revenue
- Cost of revenue: $7.72B, 24% of revenue
- SG&A: $7.40B, 23% of revenue
- Net income: $5.69B, 17% of revenue
- Interest, other & tax: $696.0M, 2.1% of revenue
Kept 17% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2018filed February 27, 2019Financial Statements
FY2018 against FY2017
| Line item | FY2018FY2017 | Change |
|---|---|---|
| Revenue | $32.75B$28.22B | +16.1% |
| Cost of Revenue | $7.72B$7.04B | +9.6% |
| Gross Profit | $25.04B$21.18B | +18.2% |
| SG&A Expenses | $7.40B$6.29B | +17.5% |
| Operating Expenses | $26.37B$18.67B | +41.2% |
| Operating Income | $6.38B$9.54B | −33.1% |
| Interest Expense | $1.35B$1.15B | +17.2% |
| Net Income | $5.69B$5.31B | +7.1% |
| EPS (Basic) | $3.67$3.31 | +10.9% |
| EPS (Diluted) | $3.66$3.30 | +10.9% |
| Shares Outstanding (Basic) | 1.54B1.60B | −3.4% |
| Shares Outstanding (Diluted) | 1.55B1.60B | −3.6% |
05—Questions
Frequently Asked Questions
What were AbbVie's primary drivers of revenue growth in 2018?
AbbVie's revenue growth in 2018 was primarily driven by its key products HUMIRA, IMBRUVICA, and MAVYRET, along with continued growth from VENCLEXTA. Strong performance in immunology and oncology portfolios were key contributors to the 16% increase in total net revenues.
What is the impact of HUMIRA's patent expiration and biosimilar competition?
The composition of matter patent for HUMIRA expired in the US in December 2016 and in Europe in October 2018. AbbVie is already experiencing direct biosimilar competition in Europe, which it expects to cause a decline in international HUMIRA net revenues in 2019. In the United States, biosimilar competition is not anticipated until 2023.
How did the Stemcentrx acquisition impact AbbVie's financial results?
The acquisition of Stemcentrx, completed in 2016, led to a significant pre-tax intangible asset impairment charge of $5.1 billion in 2018. This impairment was primarily due to lower probabilities of success for its Rova-T asset and other early-stage assets, which negatively impacted the company's net earnings for the year.
What is AbbVie's strategy for future growth?
AbbVie's strategy focuses on continued investment in its R&D pipeline, particularly in immunology, oncology, and neuroscience, to drive the development of new medicines. It also aims to diversify its revenue streams, ensure strong commercial execution for new product launches, and optimize operating margins. Returning value to shareholders through dividends and share repurchases remains a priority.
06—Continue