10-KPeriod: FY2019

AbbVie Inc. Annual Report, Year Ended Dec 31, 2019

Filed February 21, 2020For Securities:ABBV

Summary

AbbVie Inc. reported strong financial performance for the fiscal year ended December 31, 2019, with net revenues reaching $33.3 billion, 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 billion, 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 billion 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.

Financial Highlights

56 data points
Beta

Revenue

$33.27B

77.6% Gross Margin

Net Income

$7.88B

23.7% Net Margin

EPS (Diluted)

$5.28

Total Assets

$89.11B

Cash & Equivalents

$39.92B

Free Cash Flow

$12.77B

Financial Statements
Beta
Revenue$33.27B
Cost of Revenue$7.44B
Gross Profit$25.83B
SG&A Expenses$6.94B
Operating Expenses$20.28B
Operating Income$12.98B
Interest Expense$1.78B
Net Income$7.88B
EPS (Basic)$5.30
EPS (Diluted)$5.28
Shares Outstanding (Basic)1.48B
Shares Outstanding (Diluted)1.48B

Key Highlights

  • 1AbbVie announced a definitive agreement to acquire Allergan plc for approximately $63 billion, a move aimed at diversifying its product portfolio and therapeutic areas.
  • 2Net 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.
  • 3New immunology products SKYRIZI and RINVOQ, launched in 2019, contributed $355 million and $47 million in net revenues, respectively.
  • 4International HUMIRA sales declined by 28% due to biosimilar competition, while U.S. HUMIRA sales grew by 9%.
  • 5The 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.
  • 6AbbVie continued its commitment to returning value to shareholders with a 10.3% increase in its quarterly cash dividend.
  • 7The 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.

Frequently Asked Questions

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.

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.

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.

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.