AbbVie, Inc. (ABBV - Free Report) signed a non-exclusive licensing deal with Pfizer (PFE - Free Report) regarding the latter’s proposed biosimilar version of its blockbuster rheumatoid arthritis drug, Humira. Per the deal, Pfizer will have a non-exclusive license to launch its biosimilar Humira in the United States on Nov 20, 2023. In the EU, Pfizer can launch Humira biosimilar when it gets approval from the European Medicines Agency.
Per the terms of the settlement, Pfizer will pay royalties to AbbVie once its cheaper version is launched. AbbVie will make no payments to Pfizer.
AbbVie made it clear that Pfizer’s U.S. license will not be accelerated by biosimilar launches by other companies, which have similar licensing deals AbbVie.
AbbVie’s stock has declined 2.5% this year so far against with the industry’s increase of 11.3%.
Humira is a key driver of AbbVie’s revenues, accounting for more than 60% of its total sales. Currently approved for several indications, Humira sales increased 11% in the first nine months of 2018 to $15 billion backed by robust demand trends despite new competition. The product continues to see strong growth in the dermatology and gastroenterology markets. The company expects Humira sales to approach $21 billion in 2020.
With Humira accounting for such a significant amount of AbbVie’s total sales, the entry of biosimilars will have a huge impact on the company’s financials.
However, AbbVie has successfully struck similar licensing deals with several companies, which have made biosimilar versions of Humira to protect its U.S. revenues from the drug. Per the settlement deals, Amgen (AMGN - Free Report) , Mylan (MYL - Free Report) , Fresenius Kabi, Momenta, Sandoz and Samsung Bioepis/Biogen’s Humira biosimilars are expected to be launched in the United States in 2023.
The settlements give AbbVie more time to strengthen its pipeline with products that are capable of making up for the expected sales decline when Humira biosimilars are launched. AbbVie expects to launch more than 20 new products or line extensions of marketed drugs before Humira biosimilar competition begins in the United States in 2023.
However, in the EU, Amgen, Sandoz and Biogen’s biosimilars were launched in October this year while others like Momenta, Fresenius Kabi and Pfizer will launch their versions as soon as they get EMA’s approval.
Direct biosimilar competition in the EU is expected to erode AbbVie’s $6 billion international Humira business in 2019.
AbbVie currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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