AbbVie (ABBV) has effectively hedged against the Humira patent cliff with its two pillar drugs, Skyrizi and Rinvoq, providing clear medium-term performance support. Pipeline assets such as the weight-loss drug ABBV-295 and the new immunology drug zumilokibart lay the groundwork for long-term growth beyond patent expirations. Coupled with its status as a “Dividend King” offering stable high returns, AbbVie continues to demonstrate investment value worthy of long-term holding amid short-term volatility.
Despite significant market fluctuations this year, AbbVie has delivered a solid performance. The company’s stock has accumulated a 10% gain year-to-date, slightly surpassing the S&P 500’s 8% return. Can this healthcare giant sustain its upward momentum? Some investors are concerned that the company faces notable short-term risks, as sales of its former best-selling drug, Humira, continue to decline several years after its patent expired. With no hope of revenue growth from Humira, the speed at which its market share is eroded by biosimilars, and whether growth drivers like Skyrizi and Rinvoq can fill the gap, will directly influence the stock’s performance.
Additionally, government-led price negotiations in the U.S. are placing pricing pressure on AbbVie’s cancer drug Imbruvica. These headwinds could weigh on the stock. However, for long-term investors, there are still three compelling reasons to consider AbbVie.
After losing exclusive rights to Humira in 2023, AbbVie quickly resumed revenue growth and achieved a considerable increase the following year. Given that Humira is the best-selling drug in pharmaceutical history, this rebound speed is exceptionally rare. Many companies struggle for years after losing patent protection on drugs far less successful than Humira. AbbVie’s rapid recovery is attributable to its diversified therapeutic area portfolio, with immunology drugs Skyrizi and Rinvoq serving as the absolute mainstays. These two drugs have already covered most of Humira’s former indications and have performed even better than management’s expectations. The company projects their combined revenue will exceed $31 billion this year, compared to the initial 2027 forecast of just $27 billion. More critically, Skyrizi and Rinvoq are not expected to face biosimilar competition until 2033 at the earliest, providing relatively high certainty for mid-term growth.
AbbVie has already prepared for the post-patent lifecycle of Skyrizi and Rinvoq. The company boasts a rich pipeline, including assets acquired through licensing and mergers and acquisitions. Among them, the investigational weight-loss drug ABBV-295 has shown promising results in a Phase 1 trial, with weight loss of 7.86% to 9.73% over 13 weeks when dosed every other week (initially) and then transitioned to monthly dosing. Most existing weight-loss drugs require weekly administration, giving ABBV-295’s monthly regimen a clear advantage. Analysts project the weight-loss drug market will exceed $100 billion within a decade, and if this drug progresses smoothly, it could become a significant growth driver for AbbVie. Additionally, the company recently acquired Apogee Therapeutics (APGE) for $10.9 billion in cash. The core asset, zumilokibart, targets immune diseases such as eczema and can be dosed every three to six months after the induction period, outperforming most current competitors that require monthly dosing. This could solidify AbbVie’s leading position in immunology and pave the way for subsequent product iterations.
AbbVie’s dividend policy is highly attractive. The company has increased its dividend for over 50 consecutive years, placing it in the “Dividend King” category. Since its spin-off in 2013, AbbVie’s dividend has grown by 203.5% over the decade, with a current forward dividend yield of approximately 2.7%, far exceeding the S&P 500 average of 1.1%. With the effect of dividend reinvestment, the stock offers considerable long-term return potential.
