01—Abstract
Summary
Summary of the 10-K filed February 21, 2020. Cited figures are marked; the original filing is the authoritative source.
AbbVie Inc. reported strong financial performance for the fiscal year ended December 31, 2019, with net revenues reaching $33.3 billiona, a 1.6% increase year-over-year, driven by its key pharmaceutical products.
The company's strategic focus remains on innovation, pipeline advancement, and returning value to shareholders through dividends and share repurchases. A significant development during the year was the announcement of AbbVie's definitive agreement to acquire Allergan plc for approximately $63 billionb, a transaction expected to diversify AbbVie's portfolio and create a leading biopharmaceutical company with strong positions across multiple therapeutic areas. The company highlighted growth from key products like IMBRUVICA and VENCLEXTA, along with continued strength in HUMIRA in the U.S. and the launches of SKYRIZI and RINVOQ.
However, AbbVie faced international HUMIRA biosimilar competition which impacted overseas sales. The company is actively managing this and anticipates no direct biosimilar competition for HUMIRA in the U.S. until 2023. AbbVie's robust pipeline continues to be a key focus, with numerous compounds in clinical development, particularly in immunology, oncology, and neuroscience.
Key financial metrics for 2019 included operating earnings of $13.0 billionc and diluted earnings per share of $5.28. The company also continued its commitment to shareholder returns, increasing its quarterly cash dividend by approximately 10.3%. Despite challenges such as biosimilar competition and the significant debt financing for the Allergan acquisition, AbbVie's strategic positioning and diversified product portfolio suggest a resilient outlook for future growth.
02—Key points
Key Highlights
- AbbVie announced a definitive agreement to acquire Allergan plc for approximately $63 billion, a move aimed at diversifying its product portfolio and therapeutic areas.
- Net revenues grew to $33.3 billion, a 1.6% increase year-over-year, primarily driven by strong U.S. sales of HUMIRA and growth from IMBRUVICA and VENCLEXTA.
- New immunology products SKYRIZI and RINVOQ, launched in 2019, contributed $355 million and $47 million in net revenues, respectively.
- International HUMIRA sales declined by 28% due to biosimilar competition, while U.S. HUMIRA sales grew by 9%.
- The company's R&D expenses decreased in 2019 to $6.4 billion, partly due to significant impairment charges related to Rova-T in prior years.
- AbbVie continued its commitment to returning value to shareholders with a 10.3% increase in its quarterly cash dividend.
- The company's significant debt financing for the Allergan acquisition resulted in a substantial increase in long-term debt, reaching $66.7 billion by year-end 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, AbbVie Inc. kept $0.24.
- Revenue$33.27B100.0%
- Cost of revenue−$7.44B22.4%
- Gross profit$25.83B77.6%
- Operating costs−$12.84B38.6%
- Operating income$12.98B39.0%
- Interest, other & tax−$5.10B15.3%
- Net income$7.88B23.7%
Where FY2019 revenue went
$33.27B- Net income: $7.88B, 24% of revenue
- Cost of revenue: $7.44B, 22% of revenue
- SG&A: $6.94B, 21% of revenue
- Other operating costs: $5.90B, 18% of revenue
- Interest, other & tax: $5.10B, 15% of revenue
Kept 24% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 21, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $33.27B$32.75B | +1.6% |
| Cost of Revenue | $7.44B$7.72B | −3.6% |
| Gross Profit | $25.83B$25.04B | +3.2% |
| SG&A Expenses | $6.94B$7.40B | −6.2% |
| Operating Expenses | $20.28B$26.37B | −23.1% |
| Operating Income | $12.98B$6.38B | +103.4% |
| Interest Expense | $1.78B$1.35B | +32.3% |
| Net Income | $7.88B$5.69B | +38.6% |
| EPS (Basic) | $5.30$3.67 | +44.4% |
| EPS (Diluted) | $5.28$3.66 | +44.3% |
| Shares Outstanding (Basic) | 1.48B1.54B | −3.9% |
| Shares Outstanding (Diluted) | 1.48B1.55B | −4.0% |
05—Questions
Frequently Asked Questions
What is the primary driver of AbbVie's revenue, and what are the trends for this key product?
HUMIRA is AbbVie's largest product, accounting for approximately 58% of total net revenues in 2019. While U.S. HUMIRA sales grew by 9% in 2019, international sales decreased by 28% primarily due to biosimilar competition in Europe following patent expirations. AbbVie expects no direct biosimilar competition for HUMIRA in the United States until 2023.
What is the significance of the Allergan acquisition for AbbVie?
AbbVie announced its intent to acquire Allergan plc in June 2019 for approximately $63 billion. This strategic move is expected to create a more diversified biopharmaceutical company with leadership positions in immunology, hematologic oncology, aesthetics, neuroscience, women's health, eye care, and virology. The acquisition aims to enhance AbbVie's existing portfolio and pipeline, providing greater scale and commercial strength.
How is AbbVie managing the decline in international HUMIRA sales and the competitive landscape?
AbbVie is addressing the decline in international HUMIRA sales, primarily caused by biosimilar competition, through various strategies. The company is focused on differentiating HUMIRA, continuing its U.S. market strength, and relying on its pipeline, including newer immunology assets like SKYRIZI and RINVOQ, to drive future growth. The company also noted that HUMIRA is facing direct biosimilar competition in Europe and other countries.
What impact did the Allergan acquisition have on AbbVie's financial position in 2019?
The pending acquisition of Allergan significantly impacted AbbVie's financial position. The company issued $30 billion in senior notes to fund a portion of the acquisition costs. Consequently, long-term debt increased substantially to $66.7 billion as of December 31, 2019. Additionally, AbbVie incurred $338 million in expenses related to the proposed Allergan acquisition during 2019.
06—Continue