AbbVie (ABBV) is a long-term play, with limited returns in the short-term.


Question: What your guy's opinion on ABBV? I saw they recently got approved for Orriahn.


Quick Diligence: AbbVie is a long-term play, with limited returns in the short-term.


The recent approval of Oriahnn (aka Orilissa) for heavy menstrual bleeding is an incremental positive, but we're mixed on Abbvie for several reasons:


1) Abbvie is still very much a Humira-driven franchise, with ~60% of sales coming from Humira last year. The upcoming expiration of Humira IP in 2023/4 in has been an overhang on the stock for a long time, and the market is anxious to see how Abbvie can diversify outside of Humira. Oriahnn is expected to be a major contributor to Abbvie's post-Humira future, with many projecting blockbuster sales potential in 2020, but we would point out that sales in other indications have been underwhelming so far, with $90M in 2019 and tracking for only $120M this year (though maybe this new approval will help jump start things).


2) We're also generally not looking to invest in large-cap pharma companies like Abbvie as they don't fit the growth profile we're looking for. At $160B+ market cap, it's really hard for Abbvie to move the needle through new R&D projects (it's going to take a lot of new approved drugs to fill Humira's $20B shoes).


If you are looking for a stable, large-cap pharma stock, however, Abbvie (now a more diversified business with the Allergan acquisition) isn't a bad play- just don't expect the world. I'd also be cognizant that they'll likely need to make some good acquisitions to fund future growth, which is hard to do consistently.