The research based biopharmaceutical company, AbbVie Inc. (ABBV, Financial), released its earnings forecast for the fiscal year which surpassed all analysts’ expectations based on certain high profile drugs which have received approval from the FDA. In the presence of rivals such as Gilead Sciences (GILD, Financial) who are working in the same pharmaceutical domain as is this company, the management remains optimistic on its upcoming future and have engaged in a price war with its immediate rival with hopes of emerging the winner through its intelligent pricing strategy. Let’s quickly look into the facts that were revealed a few days back when the pharmaceutical company announced its earnings estimates for the full-year 2015.
The forecast is backed by recent developments
The pharma major has announced that it expects its earnings to come in the range of $4.25-$4..45 a share, the mid-point of which represents a 33.4% increase from the 2014 earnings guidance. In fact, the higher end of the range outpaced the average estimate of Thomson Reuters’ analysts which stood at $4.32 per share for the 2015 full-year.
This optimism in the company tone is backed by the high sales of Humira, AbbVie’s leading drug for rheumatoid arthritis, as well as the launch of its hepatitis C treatment drug, Viekira Pak, which has received the U.S. FDA’s approval last December. In fact, the leading Humira drug which is being used for treatment of auto-immune disease contributes 63% to the company’s net sales and is currently being used for treatment of eight indications as per FDA approval. It is being predicted that the recent drug that has been sanctioned by FDA for treatment of hepatitis C would also see whopping sales in the year ahead.
Management is hopeful though there is competition
Viekira Pak which has just received approval is facing tough competition from Gilead Sciences’ Harvoni which has the same prophylactic effect for patients suffering from genotype 1 hepatitis C. To promote the drug, the company has tied up with the nation’s largest pharmacy-benefits provider, Express Scripts Holding Company (ESRX, Financial), under which Express Scripts would promote Viekira Pak and drop Gilead drugs in exchange for a significant pricing discount from the pharma major.
This in turn intensifies the competition between the two drugs which has been there from the starting point for AbbVie as its drug for hepatitis C treatment is priced lower Harvoni’s price tag which in turn makes it more appealing to the needy patients. Nevertheless, the company remains sure that its future growth would be bolstered by enhancing its focus on key products in its pipeline such as Creon for replacing deficient pancreatic enzymes and Duodopa for treatment of Parkinson’s disease. The company believes that these strategies undertaken by it would aid to remain ahead of its immediate rival at all times by becoming potential lead products for AbbVie in 2015.
Besides these mentioned drugs, there are several others in its clinical pipeline which could further boost the company’s organic growth. CEO Gonzalez puts the future in these words – “AbbVie has delivered strong performance in our first two years as an independent company and we expect to continue building on that momentum in 2015 with a return to top-tier growth.”
Final thoughts
Though the flow of generic drugs in the market could hurt AbbVie’s upcoming profits, the company is counting on the growth from its best-selling drugs, the drugs just sanctioned and those which are waiting in the clinical pipeline. While management looks convinced of their future moves only time will foretell whether the pharma giant is able to achieve strides in its business line amid intense competition. As of now things do seem rosy for AbbVie, so let’s stay tuned!
